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Labor Capital and Money; 



THEIR JUST RELATIONS. 



AN EXPOSITION OF ECONOMIC ERROR WHICH PERVERTS PUBLIC 
SENTIMENT, CONTROLS LEGISLATION, BARS JUST ENACT- 
MENTS, PRODUCES NEEDLESS STRIFE BETWEEN LABOR 
AND CAPITAL, IDLENESS AND POVERTY AMID ABUN- 
DANCE, CAUSES UNJUST DISTRIBUTION OF WEALTH, 
BUSINESS DEPRESSIONS AND PANICS, AND SAPS 
THE FOUNDATION OF ALL GOVERNMENT. 







- 
JAN 191888 >S) 



This inquiry discloses the fact that "Ricardo's Law of Rent" (so called) is 
founded in error, and consequently overthrows all theories and conclusions 
based upon it. 



BRADFORD, PA.: 

PRESS OF D. W. EERCH, PUBLISHER. 

1888. 




^ 



\ 



c* 



Eniered according to Act of Congress, in the year 1887, 

By C. C. CAMP, 

In the Office of the Librarian of Congress, at Washington. 



PREFACE. 



This work is the outgrowth of a presentiment 
of the coming of the industrial struggle which 
now forces itself upon the attention of society. 
For years there has grown upon me the convic- 
tion that an unseen evil influence was gathering 
a pressure and power, which, sweeping in a great 
cycle, would sooner or later engulf civilization, 
unless discovered and eradicated. I determined 
to sift political economy to the bottom in order 
to aid, if possible, in the accomplishment of this 
object. In this investigation I found radical 
errors in the groundwork, and from thence per- 
vading every part of political science, as pre- 
viously promulgated. By correcting these errors 
I have laid up one stone of truth upon another, 
not heeding where the truth might lead, until in 
a complete explanation of existing conditions it 
is presented to the reader. The result is as 
much a surprise to me as it can be to any other 
person. 

The practical overthrow of the law of rent, 
hitherto considered as firmly established as the 



VI PREFACE. 

law of gravitation, and the consequent ellimina- 
tion of its influence from the contemplation of 
the conditions of mankind, which have hitherto 
been regarded as sequential penalties of its 
operation, is a result as gratifying as it is 
novel. 

That opportunities and facilities are found to 
exist, which can be made to supply abundantly 
every necessity, or rational want of man, as well 
as means to secure a just and equitable distribu- 
tion without any shock or unnecessary suffering 
in society, is especially pleasing to me. 

That the work may assist in upbuilding truth, 
in establishing justice and fraternity, in main- 
taining peace and plenty, as a means of securing 
happiness to all is the wish of 

The Author. 

Fredonia, N. Y., August i, 1887. 



TABLE OF CONTENTS. 



PAGK. 

Introduction, ------- i 

BOOK I.— OF THE PRODUCTION OF WEALTH. 

Chap. I. Definitions, ------ 7 

Land, Labor, Capital, - 9 

Distinction between Money and Capital, 18 

" 2. Factors of Production, 26 
" 3. Money, The Factor of Distribution ; Its 

Origin, Powers and Functions. - 30 

" 4. Insufficiency of Previous Explanations, 52 

Malthus, ------ 53 

Henry George, ----- 55 

BOOK II.— OF DISTRIBUTION. 

Introduction, showing that products of industry are 

divided by four factors, - 67 

Chap. i. Of Rent and the Laws of Rent, - - 78 

" 2. Of Profit and the Laws of Profit, - 94 
" 3. Of Interest — Inflation and Contraction 

defined, ------ 101 

" 4. Wages, ---..-- no 

" 5. The Solution of all Problems of Industry, 119 

BOOK III.— THE REMEDY. 

Chap. i. Inadequacy of all Proposed Remedies. 136 

Co-operation, 137 

Socialism, - 139 

Labor Organizations, - - - 141 

Confiscation of Land Values, - - 147 

The True Remedy, 163 



Vlll 



CONTENTS. 



Chap. 2. Of Money — its Essential Character, 

" 3. Money — By Whom Made, 

" 4. " Out of What Made, 

" 5. " How Much Made, 

11 6. " Suggestions how to give par 

Value, ----- 

11 7. Conclusion, ------ 

Appendix, ------ 

Delusions common to all classes of society, - 
Tables compiled from the 10th census of the 
United States, - 

Showing gross Raw Products of the 
United States, according to said census, 
with all estimated omissions by govern- 
ment officials, ----- 

What became of the total production of 
the U. S. for the year 1880, amount con- 
sumed on farm, consumed raw, exported 
and amount manufactured, - 
Shows the condition, profit, rent & wages 
of the farmers of the United States, - 
Condition of the manufacturers in the 
United States, ----- 

Percentage P. & I. Agricultural products, 
Per cent, of Profit and Interest which ap- 
pear in raw products, 

Percent of profit and interest which ap- 
pear in finished products, - 
Total gross production of all branches of 
industry from incipiency to finality in the 
United States for 1880, and showing where 
the pauper and millionaire originate, 



I. 
II. 



Table 1 



Table 2. 



Table 3. 

Table 4. 

Table 5. 
Table 6. 



Table 7. 



Table 8. 



165 
174 
179 
187 

200 
206 
223 

224 

232 



234 



241 
236 

243 
244 

■ 246 
247 



249 



INTRODUCTION. 



Conditions of society which challenge investiga- 
tion. 



The nineteenth century has witnessed the 
most remarkable awakening of mental and physi- 
cal activity. Patient, earnest, fearless investi- 
gators in every department of science, have 
invaded the domain of nature in search of princi- 
ples and facts which might add to the welfare 
and happiness of mankind. 

What science has demonstrated, the practical 
mind has utilized. The busy-brained inventor, 
has subdued the subtle and potent forces 
of nature, and made them subject of his will ; 
has compassed land and sea with devices to 
facilitate commercial intercourse; has multiplied 
and remultiplied the efficiency of labor, until 
productive power and production itself, has 
passed the utmost bounds of necessity, of desire 
or caprice. 

The student of political science has dug to the 
root of social relations ; has boldly challenged 



INTRODUCTION. 



the right of ancient superstitions and usurpations 
to cast their shadows across the present ; has 
unfolded the rights of individual humanity, and 
claims to have demonstrated that the object of 
government founded in justice and bounded by- 
equity can only be attained by securing to the 
individual citizen the greatest liberty and happi- 
ness consistent with public good. 

Were these deductions true, and governments 
founded upon such principles amidst abundance 
of production, it would seem to follow as a neces- 
sary consequence that poverty would be eradi- 
cated and want and wretchedness unknown. 

The most casual observation shows that no 
such results have been attained. Go where you 
will in civilized society and the poor are always 
with you. Amidst abundance of wealth which 
his own hand has created ; amidst graineries full 
to repletion ; amidst warehouses of fabrics, whose 
texture bespeaks warmth, comfort and health; 
amidst luxuries limited only by satiety, the 
laborer stands compelled to beg permission to 
share sufficient to satisfy a niggardly necessity. 
The place where brightness and revelry and 
mirth hold perpetual holiday, casts its shadow 
over the hovel, where the deeper shadow of want 
and wretchedness is never absent. 



INTRODUCTION. 3 

The laboring many, trudging to their ceaseless 
treadmill of half requitted toil, behold the rich 
few in gay attire and gaudy trappings, go jauntily 
to resorts of pleasure, feeling that every farthing 
of useless waste represents comforts and wants 
of wife or child taken out of their labor, they 
know not how or why. 

The clod falls continually upon the coffin of 
him who died from surfeit; and, if we listen 
closely, we can ever hear the hearse driver, on 
his way to the Potter's field, singing : 

"Rattle his bones over the stones, 
He's only a pauper whom nobody owns." 

Nor do we find this condition confined to wage 
workers alone. Everywhere in society, thrifty, 
industrious and energetic producers, toil as they 
will, husband their capital as they may, yet life 
presents no rest or leisure, no opportunity for 
culture — simply a struggle for bare existence. 

The manufacturer, in the tide of prosperity, 
finds his storehouses filling with goods. He 
finds warehouses crowded everywhere. One by 
one, competent, faithful hands are discharged. 
Business comes to a standstill. We call it a 
"business depression. ,, For want of knowledge 
of the cause, one says, "Over production"; and 



4 INTRODUCTION. 

another, with just as little reason, says, "Want 
of consumption." 

Over production, indeed! When you can al- 
most hear the rustle of the angel's wings that 
bore away the breath of a child who died for 
want of breath ; and ever and anon come whirl- 
winds, we call them panics, when capital struggles 
no longer and mills and factories stand idle ; and 
he who but yesterday was weaving garlands of 
happiness in a thousand hearts finds himself 
stranded and none "so poor to do him rever- 
ence." 

The question of questions which this genera- 
tion has to answer is, "Why, amid abundance, 
poverty remains?" What are the means by 
which production is taken from the large body 
of producers and concentrated in the hands of a 
few? 

The time has passed for evasion or subterfuge. 
Ridicule and sarcasm must give place to reason. 
Thinking men are looking each other in the face 
and asking, "What of the night?" 

That no one of the current explanations finds 
lodgment in the judgment of men is evident from 
the painful uncertainty and doubt in master 
minds, and the apathy of those who could and 



INTRODUCTION. 5 

would correct existing evils, if a sure and steady 
light were thrown upon this subject. 

One claims that tariff is the cause, another 
that tariff is the remedy ; one that a tax upon 
land is too grievious to be borne, another that 
tax is the remedy, and so on to the end ; while, 
as a result of confusion, organized labor and or- 
ganized capital stand confronting each other like 
hostile foes in armed neutrality, when by every 
truth of science, every principle of justice, every 
teaching of political economy, it can be demon- 
strated that labor and capital are identical in in- 
terest, identical in the great struggle for indus- 
trial emancipation, identical in success, indentical 
in defeat. 

That these conditions are not the result of 
natural laws is evident by the fact that the la- 
borer, whether working for himself or another, 
produces more than enough to supply all his 
necessities and even the luxuries of life. This 
would be retained by him in the natural order 
of things did not the greater portion, by some 
power supreme and incomprehensible, slip from 
his grasp. 

If not natural, it is in the power of just govern- 
ment to correct. 

Lurking somewhere in social or political 



6 INTRODUCTION. 

adjustment, must be found an explanation of 
these anomalous conditions, which has escaped 
previous writers upon this subject. 

I propose to sift out the error which obscures 
all previous reasoning upon these questions ; to 
explain, by a strict application to the rules of po- 
litical science, the causes which lead to existing 
unjust conditions and point out a broad, clear 
way to the equitable distribution of wealth. 

I shall hew to the line. If I cut through 
knotty superstitions or prejudices, I can only 
answer, my duty is to mankind and not to any 
man or set of men. 



ERRATA. 

Page 7, line 6, "purchaser " should read producer. 

17, " 13, " not production" " not productive 

81, " 24, " one-tenth" should read seven-tenths 

149, " 14, "a little over" " a little less than. 

184, Transpose lines 14 and 15. 

185, "influx should read flux. 



BOOK I. 

Of the Production of Wealth. 



CHAPTER I. 

Definition of words used in economic writings, 
showing the distinction between land, labor 
and capital as the factions of production and 
money the factor of distribution. 



The object of this work is to ascertain the 
causes which lead to extreme poverty and ex- 
treme wealth in every stage of civilization ; or in 
other words, to ascertain by what means a small 
portion of society absorb the products of labor, 
except the bare living of the purchaser ; to show 
that this condition is not natural or just and to 
suggest a remedy. 

To accomplish this it will be necessary to ex- 
amine and explain so much of political economy 
as relates to the production of wealth; to ascer- 
tain the factors of production, their relations, 



8 DEFINITIONS. 

mode of development and contributions to final 
results, and afterwards to note the distribution of 
the product, through the various channels, in 
which it is caused to flow, by natural and arti- 
ficial laws controling civilized society. 

In this examination the technical terms of po- 
litical economy will constantly recur. Here 
trouble begins. The nomenclature of this science 
is not accurate. 

Those accounted the foremost writers on eco- 
nomic subjects use the same terms to express 
different ideas, to express diverse ideas, and 
sometimes ideas of opposition. Besides this, the 
technical use is often much more extended or 
restricted than the common and vulgar use of 
the same word. Now, as I desire to make this 
work a demonstration as accurate and conclusive 
as a theorem of Euclid, and as I also desire to 
make it useful to that large class of society who 
have little opportunity to follow economic pur- 
suits, I propose to define such terms as I use 
with scientific accuracy, and also to explain when 
the ordinary use expands or contracts their 
meaning. This does not require any new terms, 
but simply the use of the most familiar and com- 
mon words confined to one meaning, and thus 
stripped of their usual source of ambiguity. 



DEFINITIONS 9 

It is an axiom of political economy that labor, 
assisted by capital exerted upon land, is the 
primary source of wealth. The three factions of 
production, then, are land, labor and capital, 
and the product, if any, is wealth. 

Land is defined by political economists with 
sufficient unanimity to be the earth, and all 
natural forces and powers incident thereto. This 
includes the sea and land, rivers and waterfalls, 
air, light, heat and electricity, the power of fruc- 
tification, and all other properties of matter w T hich 
assist in furnishing means to satisfy human de- 
sire. 

Labor, as applied to production, is defined as 
human, physical exertion, as modified by, and 
dependent upon, hereditary traits, mental and 
moral culture. 

Capital is one of the ambiguous terms of po- 
litical economy. Standard authors define the 
word as fancy dictates and use it to suit every 
convenience. 

Henry George, in " Progress and Poverty/' 
makes a thorough examination of the nature and 
relations of capital, in order to give a clear idea 
of this term. He collates the definitions of nu- 
merous authors, shows their inconsistencies and 
rejecting errors, sets the meets and bounds of 



IO DEFINITIONS. 

the term, so that the idea of what is and is not 
capital is readily discernable, and then confounds 
all his subsequent reasoning by falling into the 
very error he has been combating. To make 
this plain I quote freely from " Progress and 
Poverty," chapter ii. He says: 

"In general discourse all sorts of things that have a 
value or will yield a return are vaguely spoken of as 
capital, while economic writers vary so widely that the 
term can hardly be said to have a fixed meaning. Let 
us compare with each other the definitions of a few rep- 
resentative writers :" 

"'That part of a man's stock,'"- says Adam Smith 
(book ii., chapter i.), " 'which he expects to afford him a 
revenue is called his capital,' "and the capital of a coun- 
try or society, ' ' he goes on to say, ' 'consists of ( i ) machines 
and instruments of trade which facilitate and abridge 
labor; (2) buildings, not mere dwellings, but which may 
be considered instruments of trade — such as shops, farm- 
houses, etc.; (3) improvements of land which better fit it 
for tillage or culture ; (4) the acquired and useful abili- 
ties of all the inhabitants ; (5) money ; (6) provisions in 
the hands of producers and dealers, from the sale of 
which they expect to derive a profit; (7) the material of, 
or partially completed, manufactured articles still in the 
hands of producers or dealers ; (8) completed articles 
still in the hands of producers or dealers. The first four 
of these he styles fixed capital and the last four circulat- 
ing capital, a distinction of which it is not necessary to 
our purpose to take any note." 

Ricardo's definition is : 

11 Capital is that part of the wealth of a country which 



DEFINITIONS. I I 

is employed in production, aud consists of food, clothing, 
tools, raw materials, machinery, etc., necessary to give 
effect to labor." — Principles of Political Economy, chap- 
ter v. 

''This definition, it will be seen, is very different from 
that of Adam Smith, as it excludes many of the things 
which he includes — as acquired talents, articles of mere 
taste or luxury in the possession of producers or dealers, 
and includes some things which he excludes — such as 
food, clothing, etc., in the possession of the consumer." 

McCulloch's definition is : 

''The capital of a nation really comprises all those 
portions of the produce of industry existing in it that 
may be directly employed either to support human ex- 
istence or to facilitate production." — Notes on Wealth of 
Nations, book ii. , chapter i. 

"This definition follows the line of Ricardo's, but is 
wider. While it excludes everything that is not capable 
of aiding production it includes everything that is so capa- 
ble, without reference to actual use or necessity for the 
use — the horse drawing a pleasure carriage, being, ac- 
cording to McCulloch's view, as he expressly states, as 
much capital as the horse drawing a plow, because he 
may, if need arises, be used to draw a plow\" 

"John Stuart Mill, following the same general line as 
Ricardo and McCulloch, makes neither the use, nor the 
capability of use, but the determination to use the test 
of capital. He says : 

1 ' 'Whatever things are destined to supply productive 
labor with the shelter, protection, tools and materials 
which the work requires, and to feed and otherwise main- 
tain the laborer during the process, are capital. — Princi- 
ples of Political Economy, book i. , chapter iv. 



12 DEFINITIONS. 

" These quotations sufficiently illustrate the diverg- 
ence of the masters. Among minor authors the variance 
is still greater, as a few examples will suffice to show." 

"Professor Wayland, whose 'Elements of Political 
Economy ' has long been a favorite text book in Ameri- 
can educational institutions, where there has been any 
pretense of teaching political economy, gives this lucid 
definition : 

" 'The word capital is used in two senses. In relation 
to product it means any substance on which industry is 
to be exerted. In relation to industry, the material on 
which industry is about to confer value that on which it 
has conferred value ; the instruments which are used for 
the conferring of value, as well as the means of sus- 
tenance by which the being is supported while he is en- 
gaged in performing the operation." — Elements of Politi- 
cal Economy, book i., chapter i. 

" Henry C. Carey, the American apostle of protection- 
ism, defines capital as 'the instrument by which man 
obtains mastery over nature, including in it the physical 
and mental powers of man himself. ' Professor Perry, a 
Massachusetts free trader, very properly objects to this, 
that it hopelessly confuses the boundaries between capi- 
tal and labor, and then himself hopelessly confuses the 
boundaries between capital and land by defining capital 
as 'any valuable thing, outside of man himself, from 
whose use springs a pecuniary increase or profit.' An 
English economic writer of high standing, Mr. William 
Thornton, begins an elaborate examination of the rela- 
tions of labor and capital ('On Labor') by stating that he 
will include laud with capital, which is very much as if 
one who proposed to teach algebra should begin with the 
declaration that he would consider the signs plus and 
minus as meaning the same thing and having the same 



DEFINITIONS. 1 3 

value. An American writer, also of high standing, Pro- 
fessor Francis A. Walker, makes the same declaration in 
his elaborate book on 'The Wages Question.' Another 
English writer, N. A. Nicholson ('The Science of Ex- 
changes, ' London, 1873), seems to cap the climax of ab- 
surdity by declaring in one paragraph (p. 26) that ' capi- 
tal must, of course, be accumulated by saving, ' and in the 
very next paragraph stating that 'the land which pro- 
duces a crop, the plow which turns the soil, the labor 
which secures the produce, and the produce itself, if a 
material profit is to be derived from its employment, are 
all alike capital. ' But how land and labor are to be ac- 
cumulated by saving them he nowhere condescends to 
explain. In the same way a standard American writer, 
Professor Amasa Walker (p. 66, 'Science of Wealth'), 
first declares that capital arises from the net savings of 
labor, and then immediately afterward declares that land 
is capital." * * * 

"Now, it makes little difference what name we give to 
things if, when we use the name, we always keep in view 
the same things and no others." * * * 

' ' This common sense of the term is that of wealth de- 
voted to procuring more wealth. Dr. Adam Smith cor- 
rectly expresses this common idea when he says : ' That 
part of man's stock which he expects to afford him rev- 
enue is called his capital.' And the capital of a com- 
munity is evidently the sum of such individual stocks, 
or that part of the aggregate stock which is expected to 
procure more wealth. " * * * 

' ' The difficulties which beset the use of the word capi- 
tal as an exact term, and which are even more strikingly 
exemplified in current political and social discussions 
than in the definition of economic writers, arise from two 
facts : First, that certain classes of things, the possession 



H 



DEFINITIONS. 



of which to the individual is precisely equivalent to the 
possession of capital, are not part of the capital of the 
community; and second, that things of the same kind 
may or may not be capital, according to the purpose to 
which they are devoted. 

" Land, labor and capital are the three factors of pro- 
duction. If we remember that capital is thus a term 
used in contradistinction to land and labor, we at once 
see that nothing properly included under either one of 
these terms can be properly classed as capital. * * * 
A fertile field, a rich vein of ore, a falling stream which 
supplies power, may give to the possessor advantages 
equivalent to the possession of capital, but to class such 
things as capital would be to put an end to the distinc- 
tion between land and capital, and, so far as they relate 
to each other, to make the two terms meaningless. * 

* * In common parlence we often speak of a man's 
knowledge, skill or industry as constituting his capital ; 
but this is evidently a metaphorical use of language that 
must be eschewed in reasoning that aims at exactness." 

# # * 

• ' Thus we must exclude from the category of capital, 
everything that may be included either as land or labor. 
Doing so, there remain only things which are neither 
land nor labor, but which have resulted from the union 
of these two original factors of production. Nothing can 
be properly capital that does not consist of these — that is 
to say, nothing can be capital that is not wealth." 

' ' But it is from ambiguities in the use of this inclusive 
term wealth that many of the ambiguities which beset 
the term capital are derived." 

1 ' As commonly used, the word ' ' wealth ' ' is applied to 
anything having an exchange value. But when used as 
a term of political economy it must be limited to a much 



DEFINITIONS. 1 5 

more definite meaning, because many things are com- 
monly spoken of as wealth which, in taking account of 
collective or general wealth, cannot be considered as 
wealth at all. * * * Such are bonds, mortgages, 
promissory notes, bank bills or other stipulations for the 
transfer of wealth. * * * Increase in the amount of 
bonds, mortgages, notes or bank bills cannot increase the 
wealth of the community that includes as well those who 
promise to pay as those w\ho are entitled to receive. 

* * * And all this relative wealth, which, in common 
thought and speech in legislation and law is undistin- 
guished from actual wealth, could, without the destruc- 
tion or consumption of anything more than a few drops 
of ink and a piece of paper, be utterly annihilated. " * . * 

"All things which have an exchange value are, there- 
fore, not wealth, in the only sense in which the term can 
be used in political economy. Only such things can be 
wealth, the production of which increases, and the de- 
struction of w T hich decreases the aggregate of wealth." 

* -H- * 

"Thus, wealth, as alone the term can be used in politi- 
cal economy, consists of natural products that have been 
secured, moved, combined, separated, or in other ways 
modified by human exertion, so as to fit them for the 
gratification of human desires. It is, in other words, 
labor impressed upon matter in such a way as to store 
up, as the heat of the sun is stored up in coal, the power 
of human labor to minister to human desires. Wealth 
is not the sole object of labor, for labor is also expended 
in ministering directly to desire ; but it is the object and 
result of what we call productive labor — that is, labor 
which gives value to material things. Nothing which 
nature supplies to man, without his labor, is wealth, nor 
yet does the expenditure of labor result in wealth, unless 



1 6 DEFINITIONS. 

there is a tangible product which has and retains the 
power of ministering to desire." 

"Now, as capital is wealth devoted to a certain pur- 
pose, nothing can be capital which does not fall within 
this definition of wealth. By recognizing and keeping 
this in mind, we get rid of misconceptions which vitiate 
all reasoning in which they are permitted, which befog 
popular thought, and have led into mazes of contradic- 
tion even acute thinkers." 

1 ' But though all capital is wealth, all wealth is not capi- 
tal. Capital is only a part of wealth — that part, namely, 
which is devoted to the aid of production. It is in draw- 
ing this line between the wealth that is and the wealth 
that is not capital that a second class of misconceptions 
are likely to occur." * * 

And, after contrasting the definitions of Mc- 
Culloch, Ricardo and Mills, and drawing the 
distinction which must necessarily be made be- 
tween wealth used for the gratification of desire 
and capital, he says : 

1 ' In all these cases the term capital is used in its com- 
monly understood sense, as that portion of wealth which 
its owners do not propose to use directly for their own 
gratification, but for the purpose of obtaining more 
wealth. In short, by political economists, in everything 
except their definitions and first principles, as well as by 
the world at large, 'that part of a man's stock,' to use 
the words of Adam Smith, 'which he expects to afford 
him revenue, is called his capital.' This is the only 
sense in which the term capital expresses any fixed idea 
— the only sense in which we can, with any clearness, 
separate it from wealth and contrast it with labor. ' ' 



DEFINITIONS. 1 7 

It would seem that nothing more need be said 
to render the term capital easily understood. 

The tests of capital, therefore, are : 

ist. It must be wealth. 

2nd. It must be wealth devoted to produc- 
tion. 

The tests of wealth are : 

a. It must be a material thing. 

b. It must be " secured, combined, separated, 
or otherwise modified so as to be capable of ex- 
change value, i. e. y capable of satisfying human 
desire;" and 

c. A negative test of wealth is : Its destruc- 
tion must lessen the sum of human wealth. 

With what astonishment, if not chagrin, then, 

do we read Mr. George as he goes on : 

"If the articles of actual wealth, existing at a given 
time in a given community, were presented in situ to a 
dozen intelligent men who had never read a line of polit- 
ical economy, it is doubtful if they would differ in re- 
spect to a single item, as to whether it should be ac- 
counted capital or not. ' Money which its owner holds 
for use in his business or in speculation would be ac- 
counted capital ; ' money set aside for household or per- 
sonal expenses would not. That part of a farmer's crop 
held for sale or for seed, or to feed his help in part pay- 
ment of wages, would be accounted capital ; that held for 
the use of his own family would not be. The horses and 
carriages of a hackman would be classed as capital, but 



1 8 DEFINITIONS. 

an equipage kept for the pleasure of its owner would not. 
So, no one would think of counting as capital the false 
hair on the head of a woman, the cigar in the mouth of a 
smoker, or the toy with which a child is playing ; but 
the stock of a hair dealer, of a tobacconist, or the keeper 
of a toy store would be unhesitatingly set down as capi- 
tal. A coat which a tailor has made for sale would be ac- 
counted as capital, but not the coat he had made for him- 
self. Food in the possession of a hotel keeper, or a res- 
tauranter, would be accounted capital, but not the food 
in the pantry of a housewife, or in the lunch basket of a 
workman." 

Money wealth, indeed ! When and where did 
Mr. George discover that money was wealth ? If 
the reader will turn just ten pages over in " Pro- 
gress and Poverty" he will find Mr. George de- 
clares that one of the " fruitful sources of eco- 
nomic error is the confounding wealth with 
money;" and here we find him drop into this 
very common source of economic error as read- 
ily as all his predecessors. 

For has he not told us, and told us truly, that 
capital must be wealth. Here he says, money is 
capital, hence wealth. There he says, and says 
truly, that it is an economic error to call money 
wealth. 

Mr. George might be forgiven for falling into 
this " common source" of error, of classing 
money as wealth, but when he goes further and 



DEFINITIONS. 1 9 

falls into the exceedingly vulgar error of calling 
money capital, i. e. s " wealth devoted to produc- 
tion," one is lost in astonishment at the ease with 
which the brightest minds are obscured. 

No writer of any eminence, which it has been 
my privilege to read, anywhere, or in any place, 
defines money as " devoted to production," under 
any circumstances. Adam Smith says "that 
part of a man's stock which he expects to afford 
him a revenue he calls his capital." Under this 
he classes money as capital, but he is very care- 
ful to point out and emphasize the fact that it is 
not production. He says, book ii., chapter i. : 
" Money is neither a material to work upon nor 
a tool to work with. * * That part of his 
capital which a dealer is obliged to keep by him 
unemployed, in ready money, for answering oc- 
casional demand, is so much dead stock, which, 
so long as it remains in this situation, produces 
nothing either to himself or his country. * * 
The gold and silver money which circulates in 
any country and by means of which the produce 
of its land and labor is annually circulated and 
distributed to the proper consumer, is, in the 
same manner as the ready money of the dealer, 
all 'dead stock.' It is a very valuable part of 
the capital of the country which produces noth- 



20 DEFINITIONS. 

ing to the country." And, speaking of the rev- 
enues of a country, he furthermore says and 
demonstrates that money forms no part of the 
revenues of any country, and although an invalu- 
able part of the stock, or, as he expresses it, 
the " Great wheel of circulation, the great in- 
strument of commerce, * * is the only part of 
the circulating capital of a society of which the 
maintenance can occasion any diminution of 
their net revenue/' Not only not productive, 
but a positive tax upon the revenues of society. 

John Stuart Mill, Science of Political Econ- 
omy, book i., chapter iv., says : " Capital, by 
persons wholly unused to reflect on the subject, 
is supposed to be synonymous with money. To 
expose this misapprehension would be to repeat 
what has been said in the introductory chapter. 
Money is no more synonymous with capital than 
it is with wealth. Money cannot in itself per- 
form any part of the office of capital, since it can 
afford no assistance to production." 

Nevertheless, the habit of classing money as 
capital has gone on until everyone seems to 
think it ought to be classed as such. We meet 
with it in so called works on political economy, 
in public prints, we hear it in public discussions, 
and in the halls of legislation, and in the class- 



DEFINITIONS. 21 

room of our seats of education. Lurking under 
this seeming harmless garb of a name, are such 
monstrous errors, such grave and far-reaching 
consequences, that I am constrained to spare no 
pains to make the distinctions so plain that no 
one in future, with any pretentions to scientific 
culture, need confound capital with money. 

The first test is, it must be wealth. Wealth is 
the product of labor. 

Now, all the labor of all the men, from Adam 
to this day, could not make a dollar, a dime, a 
penny. They might fashion gold or silver into 
the form of money, but something else is want- 
ing. Until you have organized society and law, 
there can be no money. 

Money is an invention of society. Its purpose 
is to represent and exchange value. Now value 
is an ideal thing. It is not matter, nor a prop- 
erty of matter, nor perceivable by any human 
sense. No one ever saw, heard or tasted value, 
or perceived it by the sense of smell or feeling. 
It is a degree of utility only perceived and esti- 
mated by the mind. Money, therefore, has 
nothing to do with the exchange of material 
things. This is the province of capital ; money 
carries back and forth their value; here its func- 
tions in exchange begin and end. 



22 DEFINITIONS. 

The Supreme Court of the United States, 
recognizing this, correctly say: " The gold and 
silver thing we call a dollar is not the standard 
of a dollar. It is a representative of it. ,, Money 
is a material thing, endowed with a legal func- 
tion to represent a fixed idea of value called a 
dollar. Without this the coins are no more 
money than a law book is law, a fire heat, or a 
magnet magnetism. 

To illustrate: A manufacturer of plows starts 
his factory on Monday morning. Labor uses 
the machinery and material making plows 
(wealth). Every day he sells ten plows and is 
paid the money (distribution), At the end of 
the week he pays his employes money ; that is, 
he distributes to each the value of his labor in 
producing plows, of which the money is a rep- 
resentative. It will at once appear that money is 
not used in making a plow, painting a plow, 
handling a plow, shipping a plow, nor anywhere 
until distribution is made, and then only in pass- 
ing values, but in no way increasing them. 

The third test of wealth made by Mr. George 
is, "that nothing can be wealth the destruction of 
which does not decrease the sum of human 
wealth." 

Should we tear up all the paper money, melt 



DEFINITIONS. 23 

up all the gold and other metal coins, there 
would remain no money, but the sum of gold, 
silver and paper, of wealth, is exactly the same. 
In other words, gold and silver and paper, as 
money, stand in the same relation as bonds and 
bills and notes They are simply the represent- 
atives of value. 

The laws of increase of capital and money are 
as varied as their powers and functions. When 
capital is needed by society, labor proceeds to 
produce it. When money is needed it cannot be 
made by labor. Artificial barriers of prejudice, 
caprice of legislators, and especially the ignor- 
ance which pervades all society upon the subject, 
prevents compliance even with the imperative 
demands of business. 

And lastly, in the return which capital receives 
for services, and the tax which money receives 
for its use, we can see the climax of folly of 
classing money as capital. The return which 
capital receives is something produced by capi- 
tal, an addition to existing wealth commonly 
called profit. The return to money is something 
taken out of wealth, created by capital and labor, 
commonly called interest. As to production and 
distribution, profit is expressed by a plus sign ; 
as to production, the return to money is ex- 



24 DEFINITIONS. 

pressed by a minus sign To do, therefore, as 
Henry George does, in " Progress and Poverty," 
confound these two distinct things and call them 
interest, is to make the sign, — and +, one and 
the same thing at the same time, and any reason- 
ing, founded upon an error so palpable, is just as 
reasonable as a solution of a problem in algebra, 
where no distinction was made as to these signs. 
The only use anyone can make of money is to 
part with it. Capital is always actually or con- 
structively in possession of the person using it 
and procuring its return — money never is. Any 
bookkeeper knows that his interest account for 
money borrowed and used by his firm is always 
on the opposite side of the ledger to the profit 
which accrues from the use of capital. Money 
never increases. Wherever interest account is 
credit, some profit account is debit. 

Perceiving the one little analogy between 
money and capital of " affording revenue," Adam 
Smith includes money in his classification of 
capital, when, in their origin, their objects, their 
functions, their powers, money and capital have 
not one thing in common. To class them as one 
is just as logical as to assert : A man has ears, a 
horse has ears ; therefore, a man is a horse. All 
writers upon political economy have accepted 



DEFINITIONS. 25 

this logic. I respectfully dissent, and shall use 
the term capital to mean : Wealth devoted to 
production. 

This will mean, not simply the making of 
things, but wealth in all forms and mutations by 
which it is made fit for consumption and brought 
to the consumer, and when its consumption is 
that of increasing or producing more wealth, 
even then it is capital. That wealth, in process 
of consumption to satisfy human desire, which 
might appropriately be called destructive con- 
sumption, is not capital. The reward, or return 
for the use of capital, I shall call profit, as do 
most writers upon this subject. 

That certain invention of society, used for 
representing and conveying value, I shall call 
money. Obligations for the payment of money, 
I shall call money obligations. The return for 
the privileges of future payments of money, I shall 
call interest. 

The term wages means the payment for human 
exertion. 

The term rent means a part of the return to 
the owner of land for the use of the original, 
natural powers of the soil, as will more fully ap- 
pear when the subject of rent is discussed. 



26 FACTORS OF PRODUCTION. 



CHAPTER II. 



Land, Labor and Capital the Factors of 
Production. 



The contribution which each renders to the in- 
crease of wealth. 



Land, in Political Economy, stands for the 
earth and all its powers. Its mines supply all 
metals and minerals, incipient wealth, from capi- 
tal to ornament, from engine to ear rings ; coal, 
stored heat, the source of power unlimited. In 
the air, burdened with light, heat and moisture, 
and in her bosom are nurtured all the elements 
of vegetable life, all powers of adaptation and 
assimilation, which promote vegetable growth, 
the ultimate origin of the elements of nutrition, 
preservation and protection of animal life. 

It is the province of labor, with the assistance 
of capital, to gather from the mines, to smelt, 
mould and fashion into capital and forms to 
satisfy desire ; to plow and sow, to harvest and 
garner and grind the grain ; to gather the fleece 



FACTORS OF PRODUCTION. 2*J 

and flax and cotton ; to spin, weave and dye, 
and finally convey the finished product so as to 
meet the demand for final distribution. 

It is in the province of capital — 

ist. To render land more productive by its 
use as fertilizers, drains, etc., by the growth of 
trees and vines, and shrubs and the like. 

2d. To enable man to use his own powers to 
greater advantage by employing the spade, plow 
and machinery upon land. 

3d. To multiply the productive power of 
labor, by utilizing natural forces in driving ma- 
chinery, such as spindles, looms and planers. 

4th. To accomplish what human power could 
not do by the multiplication of the energy of 
natural forces through the use of engines and 
machinery for handling, rolling and forging vast 
weights of metals, and tackle, for moving and 
placing large weights required in buildings, 
bridges and the like. 

5th. To vastly facilitate the exchange of 
products, beyond the ability of animal power, by 
its employment in railroads and steam naviga- 
tion. 

6th. To store and keep for future consump- 
tion by warehouses, graineries, barns and the 
like. 



28 FACTORS OF PRODUCTION. 

The introduction of steam power into produc- 
tion, and especially the improvement in ex- 
change, which has been wrought by railroads 
and steam navigation, has changed in a measure 
all relations of society, both individual and na- 
tional. The products of all climes have become 
interchangeable. Natural possibilities every- 
where have been brought within the radius of 
utility. Where soil and climate render it de- 
sirable to pursue different branches of industry, 
so as to realize the greatest return with least 
cost, there man can go and be within the sphere 
of exchange. Where natural powers and re- 
sources stand ready to aid labor and capital in 
farthering production, there can be found supply 
and demand. All lands become as one land ; all 
lands compete with all other lands; land values 
become equalized and rent lower. Thus railroad 
and steam navigation have brought the wheat 
fields of Minnesota almost as near the markets 
of Liverpool as those of York or Lancaster, and 
the grazing grounds of Colorado and Texas as 
the Highlands of Scotland. In consequence of 
this, rent has fallen in some parts of England 
from £$ to 20 shillings. Capital thus changes 
the entire relation of landlord and tenant. 

Although land furnishes all natural opportuni- 



FACTORS OF PRODUCTION. 29 

ties, such opportunities are dependent upon 
labor for their utility and value. Land is practi- 
cally worthless without labor. Neither is labor 
capable of availing itself of the use of land with- 
out capital. In the lowest form of existence 
known to history men had the implements of the 
chase and the tools of husbandry, and with these 
the survival of the race was a question for cen- 
turies to determine. With the augmented de- 
mand, which came with the increase of popula- 
tion, capital became a necessity. Capital is, how- 
ever, the product of labor. When it is thus 
shown that the value of land depends upon labor, 
and the existence and utility of capital is derived 
from labor, it would seem that labor could al- 
ways command a just proportion of the joint 
exertions of the factors of production. That it 
does not is painfully evident, and that it is a re- 
sult of unjust social environments I think will be 
made to appear. 



30 FACTOR OF DISTRIBUTION. 



CHAPTER III. 



Money as the Factor of Distribution. 



Its origin, objects and relation to the factors of 
production. 



If money is not capital, what is it? What are 
its relations to production ? 

In the earliest stages of society money is not 
found. One made the bow and arrow and spear, 
one caught fish, another followed the chase, all 
lived in communities, exchanging or holding in 
common the product of forest and stream. As 
population increases and society advances, the 
necessity arises for a more thorough utilization 
of the productive power of nature. Cultivation, 
which could easily support one inhabitant to the 
square mile, must be crowded up to the point of 
supporting fifty to one hundred to the square 
mile. Every resource of nature must be pushed 
to its utmost, every power of man be brought 



FACTOR OF DISTRIBUTION. 3 I 

into activity, or society would perish. The di- 
vision of labor becomes a necessity. One be- 
comes a husbandman, another a mechanic, an- 
other a tailor, another a miller. Exchanges be- 
come more numerous, complicated and difficult. 
The farmer, who would have clothing, or boots, 
or a plow, takes his wheat to the tailor, the shoe- 
maker or the plowmaker, where he finds they do 
not want wheat, but do want flour ; so he goes 
to the miller, where he finds the water is run 
low, and so on, through endless exchanges and 
complications, with consequent loss of time and 
waste of productive power. Money is an inven- 
tion of society to prevent just such unnecessary 
exchanges ; to facilitate distribution without ex- 
change of products; to render unnecessary num- 
berless useless, wasteful and costly exchanges. 
It is an invention which is the outgrowth of the 
advancement of civilization. It is a necessity to 
the existence of society. The power to make 
money inheres in civil government, just as do 
the powers of preserving peace or of defence in 
war. Recognizing this, all civil governments de- 
termine the character of their coinage, what 
shall be the material, how assayed, weighed, al- 
loyed, divided; what value each denomination 
shall represent; how interchangeable, what 



32 FACTOR OF DISTRIBUTION. 

devices to prevent counterfeiting ; and when so 
made as to be readily recognized, they give it 
the power of legal tender, which makes it the 
legal representative of debts and their value 
within the realm. Money thus constituted be- 
comes the legal unit of estimate of all values and 
of the payment of debts, and is distinguished by 
this from all other things in society. The mo- 
ment wealth is constituted money it ceases to be 
governed by any of the laws of wealth, because 
it cannot perform any of the functions of wealth 
or capital. It has now gone up higher; has as- 
sumed new and important functions. It is now 
a law unto itself. It has become an agent to 
lessen the labor of exchange. 

This is the primary use of money, and its con- 
sequences are not easily computed and but half 
understood. The most conspicuous are : 

1st. The immense saving of productive power 
of labor and capital in expense of exchange to 
be invested in further production. 

2d. The possibilities of accomplishing what 
is known in political economy as the division of 
labor and the consequent increase of work, 
which the same number of people are capable of 
performing, which Adam Smith, in chapter ii., 
"Wealth of Nations," says, arises " from the in- 



FACTOR OF DISTRIBUTION. 33 

creased dexterity in every particular workman"; 
" from saving of time lost in passing from one 
specie of work to another," and " lastly from the 
invention of a great number of machines which 
facilitate and abridge labor." 

3d. Money renders it possible for labor and 
capital, through the great channels of commerce, 
to utilize the forces of nature to the best advant- 
age. What I have said as to capital in this re- 
spect would be lost were it not for money. This 
will become manifest to any one who will take 
the trouble to study for himself how it would be 
possible to operate a railroad, or manage the 
business of a steamship, without money. 

In such case, every person desiring freight or 
passenger transportation, would be compelled to 
bring some product of his labor, which could be 
weighed, measured, or subdivided to pay for 
passage or transportation. Ordinary products 
would be useless to a common carrier. Suppos- 
ing it were possible to procure enough gold or 
silver to perform the simple exchanges of this 
character for the world's carrying trade of to-day, 
(which is a very doubtful supposition), even 
then every agent would be compelled to assay, 
weigh and subdivide these metals, to make 
change and payment in each transaction, from a 



34 FACTOR OF DISTRIBUTION. 

penny to an eagle, which would so delay and 
impede transportation, or increase its cost, that 
seven out of ten railroads now in use would be 
worthless were money stricken out of existence. 

Important as this primary use or function of 
money is, it has a far greater resultant influence. 
Every act of paying out money in production, 
results in storing wealth. Every payment to the 
laborer, by which his portion of his production 
is distributed to him, leaves in the hands of him 
who paid the money the wealth thus created. 
The result of the distribution which money 
makes is the storing of wealth, more particularly 
capital, for future use. This resultant power is 
in the hands of the possessor of money. He can 
employ labor and capital to produce wealth, pay 
wages and profit and have capital. He who has 
land can borrow money, store capital, and with 
his labor and capital produce wealth, and afford 
to pay for the addition to wealth which the capi- 
tal stored by money produces. He who has 
money, " dead stock," can demand a portion of 
the return which the capital stored by the use of 
his money affords. 

Interest, then, is the result of this power of 
money, to represent and exchange value and 
store capital. It occurs in the construction of 



FACTOR OF DISTRIBUTION. 35 

all capital where future returns for use is to 
repay present advances of value, such as hotels, 
warehouses, ships, railroads and the like. To 
labor, which constructs such works, there never 
can be any payment in kind. Five, ten, or fifty 
years may elapse before the return will be re- 
alized, to pay for the first and last spike driven 
by labor, and when the return does come there 
is no tangible product, nothing except valuable 
services, and these, especially if a year or two in 
the future, neither stop hunger nor warm the 
body. Each day the laborer throws up the 
mound of dirt which will be the thoroughfare of 
commerce, creating capital of more value than 
his wages, but he cannot subsist upon this or 
upon any portion of the production of this cap- 
ital, present or future. Another, day by day, 
puts into solid wall his labor, creating capital, a 
portion of which is his wages. How shall the 
proportion of this value be given to him to en- 
able him to supply his wants ? How is wealth or 
capital to be stored when there is no product for 
exchange of kind ? It is done by the advance of 
money. This principle runs through the pro- 
duction of all articles whose consumption in use, 
continues through a period of time, such as en- 
gines, machinery, etc. ; also through all articles 



36 FACTOR OF DISTRIBUTION. 

of consumption, whose completion requires them 
to go through different hands before ready for 
distribution. Money pays the labor, i. e., stores 
the wealth and additional value created by labor 
in every stage of transition, from raw material to 
finished product. As a rule, the laborer must 
subsist upon the result of his labor from week 
to week, but it rarely occurs that he can use the 
product of his own labor — as he spins thread or 
forges steel, he is, in the broadest sense, produc- 
ing bread. If he needs neither thread nor steel, 
he does need its equivalent. He gets this by 
the use of money. Whenever money is used in 
production, or whenever money is loaned to be 
used in production, it is to enable labor and cap- 
ital to store wealth. It is just the reverse pro- 
cess of the ordinary or primitive use of money. 
That is the subdividing wealth for consumption, 
this the aggregation of wealth for future use. 
The following conclusions necessarily result from 
these premises : 

1st. That in some degree all exchanges are 
limited by the quantity of money in every country. 

2nd. That the division of labor, with its 
momentous results, is practically dependent upon 
money. 



FACTOR OF DISTRIBUTION. 37 

3rd. That money is the means which enables 
labor and capital to store almost all wealth, and 
without which the most important and useful 
capital would not be made or stored. 

The rules which may be laid down as embody- 
ing the government of these facts and principles 
in society are as follows : 

1st. When money is so scarce as to impede 
the division of labor, production will necessarily 
be restricted, as is the case in all half-civilized 
countries. 

2nd. When there is a surplus over and above 
the necessities of the primary use of money, sub- 
ject to loan, capital will be stored with this, 
which, in expectancy, will pay wages, wear and 
tear (its own reproduction), profit equal to inter- 
est, or greater, and interest on the value of pro- 
duct to final distribution. 

This is the same as saying that a man will 
store capital with his own or borrowed money, so 
long as it will pay and no longer. Now, as 
money can always be turned into capital, he who 
has money commands capital; that is to say, he 
can store capital for any business he may choose. 
As men naturally select the most profitable bus- 
iness, so they would not loan money at a rate 



38 FACTOR OF DISTRIBUTION. 

below the amount they could make in the most 
profitable business open for occupation. Hence, 
as a rule, money will be used at the highest point 
of productiveness open to it, in any given condi- 
tion of society; that is, interest is in accord with 
the profit made by capital at the highest point of 
opportunities, which will use the quantity of 
money in a country. 

If there was a given quantity of money in a 
country, and opportunities sufficient to employ 
the capital it would store to produce seven per 
cent., interest would oscillate around seven per 
cent. If six per cent, then interest would stand 
at or near six per cent. But money is not, as 
we have seen, a natural product, nor is it gov- 
erned by the laws of competition, nor by any 
other fixed rules. It is a kind of unnatural child 
of ignorance sired by necessity. There is nowhere 
any proportion established or any attempt to es- 
tablish a proportion between its quantity and its 
functions. One nation regulates it so as to meet 
the requirements of production at four per cent, 
others at six, eight or ten. 

Now, there never was a country yet which 
could produce for a population of over ten to the 
square mile sufficient to pay a net profit of over 
three per cent, for any length of time upon the 



FACTOR OF DISTRIBUTION 39 

capital necessary in production. Admitting, 
then, that the amount of capital stored by money 
constitutes but a small portion of the gross cap- 
ital of the country, it will follow, as a necessity, 
that the balance who constitute the great body of 
society, must work their capital at a very 
low rate, to bring the average down to or below 
three per cent. A careful examination of the 
actual conditions of society reveals just this, as a 
fact, i. e. y the largest share of producers, employ 
their capital at or near the margin of cultivation, 
so, in other words, as to make no profit and just 
so as to get average wages. This results from 
various causes, even where money under the 
rule is allowed to store capital. 

Thus, money is dull at six per cent. A man 
sees a chance to make profit of six per cent, in a 
canning factory. He puts up one. He has not 
enough money to store stock and borrows an 
equal amount to do this. Hundreds of others 
do this, and in other enterprises also. The first 
year he does well, makes six per cent., all round 
and pays interest. The next year fruit is a little 
higher, money a little scarcer, goes up to seven 
per cent:, demand a little slack for finished goods. 
He foots up and finds his enterprise has made 
five per cent, all round, pays seven per cent, on 



40 FACTOR OF DISTRIBUTION. 

borrowed money, and it leaves him on his own 
capital three per cent. The next year he will 
probably shut down or drag along at about two 
per cent. 

A farmer has land and just one-half the capi- 
tal which his labor can economically use. He 
borrows as much money at six per cent, and puts 
it into crops. Drouth comes, and when he 
cleans up, he finds, if very lucky, he has three 
per cent, left upon his capital, all of which goes 
to pay interest. He worked his own capital for 
nothing. 

But the principal reason, as I stated it above, 
is because it is not in the wood. The producer 
does not make profit much above the margin, 
because there is no such profit to be made. In 
the United States, where land is subdivided and 
held under the ordinary laws of competition, 
take the largest class who occupy the land, the 
farmers, and they do not on the average make 
a net increase on the value of land and capital of 
two per cent. I make this statement deliberately 
and challenge investigation. In taking a com- 
putation there must be taken the price for which 
land, implements, stock and capital would sell. 
Enough must be charged to expense to make 
good all loss in fences, barns, tools, sufficient to 



FACTOR OF DISTRIBUTION. 4 1 

pay taxes, insurance, for all manures and fertil- 
izers to keep land in just equal condition, use of 
team, and then must be credited up to wages an 
amount equal to the average of mechanic's 
wages for every day in the year for each member 
of the household who contributes to productioii 
by plowing, seeding, sowing, milking, churning 
and the like, and then (well, I will not say any- 
thing about the interest on the mortgage, for I 
should bring nine farms out of ten in debt), it 
will be found I have overstated the net gain of 
the farm when I place it at two per cent. When 
the thing is sifted to the bottom it shows that 
average interest is from two to three times as 
great as average profit. All interest is paid out 
of profit. If it is not made by the capital stored 
by money, then it must be paid out of other 
profit, and the interest is ultimately paid by those 
who consume the products of the capital stored 
by money, and becomes a general tax upon com- 
munities. Money takes no chances. Labor and 
capital take all chances of production. 

Profit and interest, therefore, are not one, are 
not equal, do not correspond in quantity, are not 
dependent one upon the other ; only such profit 
as is made at the top of production corresponds 
in quantity with interest, or, as was before stated, 



42 FACTOR OF DISTRIBUTION. 

at the highest point of production, consistent 
with the amount of money in circulation. This 
brings us to the third rule, which is : 

If the surplus of money increases, or demand 
decreases so as to lower interest, land which 
would not produce net profit equal to interest, 
will now do so, and be brought into cultivation. 
Capital will be stored to meet the requirements 
of manufacturing, mining and transportation en- 
terprises at the lower rate. Should money con- 
tinue to increase and interest to lower, this would 
go on until all labor was employed or all re- 
sources exhausted. 

The reverse would of course be true. As in- 
terest advanced, less and less money would be 
borrowed to store capital, and if it continued no 
opportunities would exist which would afford a 
return to pay interest. This third rule is a nec- 
essary inference growing out of the second, for 
what will occur in any particular stage of inter- 
est will occur in all. 

The views here presented, as to the residuary 
effect of money, are essentially new, but when 
examined will be found to be a statement of the 
common experience of business men everywhere. 
It illustrated the common way of storing capital. 



FACTOR OF DISTRIBUTION. 43 

Telegraphs and railroads are so constructed, 
mines and manufactories worked and their pro- 
ducts stored Within the last forty years, five 
billions of capital have been thus stored in the 
United States in making railroads alone, which, 
under the slow accumulations of a system of 
barter, would have consumed hundreds of years 
in their construction, if, indeed, they could ever 
have been built. 

That these plain facts, the result of this efifect 
of money, have not been apprehended by politi- 
cal economists, is due to the confusion of thought 
consequent upon confounding money with capi- 
tal by Adam Smith. 

As a consequence of this classification he and 
all of his followers are compelled to call money 
gold and silver, or gold and silver money, when 
it is a plain fact that these metals may increase 
and money decrease, or that money may increase 
and gold and silver decrease. That the demand 
for money may increase and demand for gold 
and silver decrease, or vice versa, or in other 
words, political economists are put in the 
dilemma that they have to ride two horses going 
in opposite directions at one and the same time. 
This would be considered a very difficult feat 
anywhere except in political economy, and while 



44 FACTOR OF DISTRIBUTION 

I admit that Adam Smith or John Stuart Mill 
could accomplish this feat, if any two economists 
could, yet I think that an analysis of their writ- 
ings will show how completely they fail, as well 
as demonstrate every theory advanced by me. 
This principal is discussed by Adam Smith 
under the head of " Stock Lent at Interest." He 
says, book ii., chapter iv. : 

" Almost all loans at interest are made in money either 
of paper or gold or silver. But what the borrower really 
wants and what the lender really supplies him with is not 
the money, but the money's worth or the goods which it 
can purchase. If he wants it as a stock for immediate 
consumption, it is those goods only which can be placed 
in that stock. If he wants it as capital for employing in- 
dustry, it is from those goods only that the industries can 
be furnished with the tools, materials and maintenance 
necessary for carrying on their work. By means of the 
loan the lender, as it were, assigns to the borrower his 
right to a certain portion of the annual produce of the 
land and labor of the country to be employed as the bor- 
rower pleases. The quantity of stock, therefore, or as it 
is commonly expressed of money, which can be lent at 
interest in any country, is not regulated by the value of 
the money whether paper or coin which serves as the in- 
strument of the different loans made in that country, but 
by the value of that part of the annual produce, which, 
as soon as it comes, either from the ground or from the 
hand of the productive laborers, is destined not only for 
the replacing a capital, but such a capital as the owner 
does not care to be at the trouble of employing himself. 



FACTOR OF DISTRIBUTION. 45 

As such capitals are commonly lent out and paid back in 
money, they constitute what is called the monied inter- 
est. It is distinct not only from the landed, but from the 
trading and manufacturing interests, as in the last the 
owners employ their own capitals. Even in the monied 
interests, however, the money is, as it were, but the deed 
of assignment which conveys from one hand to another 
these capitals which the owners do not care to employ 
themselves. These capitals may be greater in almost any 
proportion than the amount of money which serves as 
the instrument of their conveyance. The same pieces of 
money successively serving for many different loans as 
well as for many different purchases. ' A, ' for example, 
lends to ■ W a thousand pounds, with which ' W ' imme- 
diately purchases of * B ' a thousand pounds' worth of 
goods. 'B' having no occasion for the money himself 
lends the identical pieces to 'X,' with which ' X ' imme- 
diately purchases of 'C another thousand pounds' worth 
of goods. ' C ' in the same manner and for the same 
reason lends them to ' Y, ' who again purchases with them 
goods of 'D.' In this manner the same pieces, either of 
coin or papet, may, in the course of a few days, serve as 
the instrument of three different loans and three differ- 
ent purchases, each of which is, in value, equal to the 
whole amount of these pieces. What the three monied 
men, 'A,' 'B,' 'C,' assign to the three borrowers, 'W,' 
* X, ' 'Y,' is the power to make those purchases. In this 
power consists both the value and use of the loan. The 
stock lent by the three monied men is equal to the value 
of the goods which can be purchased with it, and it is 
three times greater than that of the money with which 
the purchases are made. These loans, however, may all 
be perfectly well secured, the goods purchased by the 
different debtors being so employed as in due time to 



46 FACTOR OF DISTRIBUTION. 

bring back, with a profit, an equal value of coin or 
paper. And as the same pieces of money can thus serve 
as the instrument of three different loans to three, or for 
the same reason, thirty times their value, so they may 
likewise successfully serve as the instrument of repay- 
ment. 

" A capital lent at interest may in this manner be con- 
sidered as an assignment from the lender to the borrower 
of a certain considerable portion of the annual produce, 
upon condition that the borrower in return shall, during 
the continuance of the loan, annually assign to the 
lender a small portion called the interest ; and at the end 
of it a portion equally considerable with that which has 
originally been assigned to him, called repayment. 
Though money, either coin or paper, serves generally as 
the deed of assignment, both to the smaller and to the 
more considerable portion, it is itself altogether different 
from what is assigned by it." 

It will be seen that Mr. Smith confines the use 
of the money to the transfer of things in exist- 
ence. That he affirms that the object of the 
loan is not the money, but the capital stored by 
it. Now, I respectfully ask of Mr. Smith or any 
of his followers, why of wealth already in exist- 
ence? Why not future wealth? It is the deed 
of assignment of labor. It is the deed of assign- 
ment of capital. It is the deed of assignment of 
one using the other. The deed of assignment of 
all capital, present, past and future. And I am 
especially grateful to Mr. Smith for showing that 



FACTOR OF DISTRIBUTION. 47 

it can be in the hands of one, two or three per- 
sons at once. And how in the hands of each it 
represents different capital, the condition being 
that it shall return a small portion called in- 
terest. In other words, Mr. A. can borrow 
money, and, instead of buying capital already 
made, he can employ hands, pay wages and 
profit, and build new machinery. He can put 
this to work, build a railroad, open up land, or 
do anything which will bring a small net amount 
increase to pay back for the loan. This is the 
only limitation, and, thanks to Mr. Smith, we 
can see how it can go back into the bank, and 
in a few days Mr. B. can borrow it, and he can 
employ some more labor and produce more 
capital; and Mr. D. likewise, and thus inside of 
a few months this money as a means constructs 
one, two, three engines (that is, distributes value 
to the accomplishment of this end), and twenty 
men, fifty men, one thousand men, who other- 
wise would stand idle, would have employment 
by the power inherent in money, inherent in 
nothing else on the earth, in the earth or under 
the earth; the power of authentication and 
public credit given by legal tender, the only limit 
being labor to use, and opportunities to make the 
interest on money. 



48 FACTOR OF DISTRIBUTION. 

Turn to Mr. Mill, book iii., chapter xi. : — 

"As a specimen of the confused notions entertained 
respecting the nature of credit we may advert to the ex- 
agerated language, so often used respecting its national 
importance. Credit has a great, but not as man)' people 
seem to suppose, a magical power ; it cannot make some- 
thing out of nothing. How often is an extension of 
credit talked of as equivalent to a creation of capital, or 
as if credit actually were capital. It seems strange that 
there should be any need to point out that credit being 
only permission to use the capital of another person, the 
means of production, cannot be increased by it, but only 
transferred. If the borrower's means of production and 
of employing labor are increased by the credit given him, 
the lenders are as much diminished. The same sum can- 
not be used as capital both by the owner and also by the 
person to whom it is lent ; it cannot supply its entire 
value in wages, tools and material to two sets of laborers 
at once. It is true that the capital which A. has bor- 
rowed from B., and makes use of it in his business, still 
forms part of the wealth of B. for other purposes ; he can 
enter into arrangements in reliance on it, and can bor- 
row when needful an equivalent sum on the security of 
it ; so that to a superficial eye it might seem as if both 
A. and B. had the use of it at once, but the smallest con- 
sideration will show that when B. has parted with his 
capital the use of it as capital rests with A. alone, and 
that B. has no other service from it than in so far as his 
ultimate claim serves him to obtain the use of another 
capital from a third person, C. All capital not his own, 
of which any person has really the use, is and must be 
so much subtracted from the capital of some one else." 
This would seem to be the exact contradiction 



FACTOR OF DISTRIBUTION. 49 

of the true theory, until we recollect that Mr. 
Mill is here talking of one thing and reasoning 
about another — is talking about money loaned, 
and reasoning about capital. B. did not part 
with any capital. He loaned money. A. used 
it to procure capital of C, who at once paid labor 
and duplicated his capital, and then there were 
two capitals where there was but one before. 
That is, there is the capital in the hands of A. 
and the capital in the hands of C, and the money 
in the hands of some other person which repre- 
sented the same value; in other words, there are 
three quantities representing the same amount 
as the original money loaned. Mr. Mill tries 
here to ride both ways at once. Turn over a 
few pages and he tells us that production cannot 
be fully exerted without credit, and a little 
further on that a man can by the use of credit, 
(loaned money), purchase not only as much as 
he has money, but as much as he has credit be- 
sides. In other words, he can store by the use 
of money as much more capital as his real estate 
and personal property. That is to say, the inert 
matter, land, can be turned into circulating capi- 
tal to aid labor in production by the use of 
money. 

This is the gist of the whole matter. Money 



50 FACTOR OF DISTRIBUTION. 

is the evidence of public credit, — public credit 
mobilized, by which all the slow accumulation 
of ages can be turned into circulating — creative 
capital. This public credit is not wealth (gold 
and silver cease to be wealth when made money), 
but the evidence that there is behind the coin or 
paper, sufficient of public power and wealth to 
make it good to the holder, and that whatever it 
by law represents, is to be had for it in exchange 
at any time, and such being its power and func- 
tion, it represents not only the power to gather 
past labor in the form of wealth, as Mr. Mill and 
Mr. Smith assert, but it represents the power to 
gather all future capacities of land and labor, the 
only limit being the capacity of labor, and op- 
portunities to pay interest exacted by money in 
proportion to use. Mr. Mill, Smith and all 
other writers down to Bastiat and George, miss 
all this, because, as just quoted, they have money 
mixed up with capital, and it is impossible to 
recognize money as a distributor, while it is 
classed as a producer, and although every decade 
has afforded disproof of one or another of the 
current theories growing out of this classification, 
although every generation has shown that they 
are not based upon any principle or governed 
by any system, as evinced by the blind groping 



FACTOR OF DISTRIBUTION. 5 I 

of different governments in monetary matters, 
such as demonetizing and remonetizing metals, 
changing coinage laws, making paper money, 
suspension of payments — during which more than 
one government would have gone to the wall, 
had they not in practice disregarded such teach- 
ings — yet, economic writers have not made one 
step forward to meet the wants of society. They 
have reiterated these sophisms until the public 
mind is befogged; until men do not know 
whether they have or have not any interest in 
money matters, whether they ought or ought 
not to interest themselves in this behalf, when, 
in fact, the power of money permeates all pro- 
duction, affects the welfare and happiness of 
every member of society, the bread in every 
man's mouth, is the bearer of one of the highest 
functions of government ; a function higher than 
capital, for it commands capital; higher than 
labor, for it commands labor; higher than 
wealth, for it commands wealth, dictates war and 
peace, and determines the issues of civilization. 



52 CURRENT THEORIES DISPROVED. 



CHAPTER IV. 



Of various theories heretofore advanced to 
account for existing conditions and their 
insufficiency. 



Theories without number have been advanced 
in explanation of the conditions which we are 
investigating. That poverty and distress are to 
be found amidst illimitable power of production, 
and a constantly increasing surplus product, is 
an enigma which forces itself upon the dullest 
comprehension. We accordingly find it the 
theme of debates in clubs, the burden of vapid 
discussions of a quasi-scientific nature, cropping 
out in the halls of legislation, in assumptious 
maudlings of the public press, until everyone, 
high or low, are ready with a solution of the 
problem, while all the time, the lean finger of 
want points to her children, as an emphatic de- 
nial that any sufficient explanation has ever been 
given of these anomilies in the social organism. 



CURRENT THEORIES DISPROVED. 53 

Of all theories advanced, which claim attention 
on scientific grounds, no one has attained such 
prominence or maintained such undisputed sway 
as that to which Malthus has given his name. 
Observing that during a given period of time 
population was increased in a greater ratio than 
subsistence, Malthus adduced and promulgated 
it as a general law that the pressure of popula- 
tion against subsistence is the necessary and in- 
evitable cause of poverty among men. That is 
to say, that a constantly increasing population, 
with a relative diminution of production, would 
drive the great mass of humanity to the verge 
of maintenance, and ultimately to the lowest 
point at which human being can live and repro- 
duce. 

Strange as it may now seem, this doctrine, sup- 
ported by its apparent mathematical genesis, be- 
came a settled dictum of political ethics. Tactily, 
if not wholly, approved by all leading political 
economists, complacently commented on by such 
writers as Ricardo and Mill, it was never seri- 
ously challenged until the appearance of " Pro- 
gress and Poverty." 

Mr. George, in discussing this theory, shows 
that there is no general law by which population 
is increased ; that population advances and re- 



54 CURRENT THEORIES DISPROVED. 

cedes; that the increase of population tends to 
increase productive power, and that as subsist- 
ance is but one part of production, the increase 
of population would tend to a better state of 
living were there no mal-adjustments of society. 

He also discusses the argument in favor of 
this theory, drawn by analogy from the multi- 
farious increase of animals and plants, and shows 
that the argument really proves the reverse of 
the theory, as this wonderful fecundity under the 
intelligent direction of man can always be made 
an increasing source of support. 

And finally, by facts, he shows that the marvel- 
ous increase of productive power, through and 
by means of invention to use the occult forces of 
nature, render it certain that whatever might 
have been the cause at any time in history, at the 
present time this law has no potency whatever. 
And I might add that a report of a bureau of 
the government, lately made, shows that a popu- 
lation of fifty millions of people can produce 
supplies for a population of one hundred millions, 
so whatever may be the cause of poverty it is 
not the want of the abundant supplies of the 
necessities of life. 

Having thus disposed of Malthus, Mr. George 
gives his own theory. He says " the reason why 



CURRENT THEORIES DISPROVED. 55 

wages tend to a minimum which will give but a 
bare living" is because of rent; i. e. } the rise of 
land values, and this is occasioned by the private 
ownership of land ; that as population increases 
men are driven to poorer land, relatively ; that 
by the law of rent, wages are determined by the 
margin of cultivation, i. e., the poorest land in 
use. All that is received on land by the cultiva- 
tion at the margin is wages and profit. All that 
is received on better land above this is rent. And 
he concludes that rent absorbs all production ex- 
cept wages and profit at the margin. As the 
margin goes down wages fall until labor gets no 
more than a bare living. His proposed remedy 
is to destroy all private ownership in land by a 
tax equal to its rental value, which shall go to 
the State in lieu of all other taxes. 

As his work "Progress and Poverty" has many 
readers and his theory many adherents, and as I 
deem it fully as misleading as the doctrines of 
Malthus, I shall examine its claims for consider- 
ation carefully before I proceed. 

The theory of Mr. George is based upon the 
law of rent, as promulgated and explained by 
Ricardo, and it is little else than these doctrines, 
enlarged and extended, on an assumption that 



56 CURRENT THEORIES DISPROVED. 

they can be made applicable to the whole of so- 
ciety. 

Mr. Ricardo says, in "Principles of Economy," 
chapter ii., that " Rent is that portion of the pro 
duce of the earth > which is paid to the landlord 
for the use of the original and indestructable 
powers of the soil. * * 

" In a new country when there is an abund- 
ance of fertile land compared with the population, 
and when, therefore, it is only necessary to culti- 
vate No. I, the whole production will belong to 
the cultivator and will be the profits of the stock 
which he advances. * * 

"When, in the progress of society, land of a 
second degree of fertility is taken into cultiva- 
tion, rent immediately commences upon the first 
quality, and the amount of rent will depend upon 
the difference of these two portions of land." 

Thus, Ricardo confines rent to the difference 
between the highest and lowest production, and 
credits all produced on the poorest land to profit 
and wages. He strictly confines the law "to the 
use of the original and indestructable powers of 
the soil." He carefully excludes all improve- 
ments or additions to land, all mines, quarries 
and timber, and states distinctly that payment 
for the use of improvements or for the privilege 



CURRENT THEORIES DISPROVED. 57 

of removing coal or timber is not paid for rent. 

Mr. George endorses these rules in the main, 
and with Ricardo, affirms : 

1st. That all the product at the margin is 
wages and profit. (He calls it interest) 

2d. That all received from better land is rent, 
wages and profit. 

But he affirms: 

3d. That Ricardo did not fully understand 
the law himself, and later dictum holds that the 
law is broad enough to include all industries, 
and does govern wages everywhere. 

In these two first propositions Mr. George 
falls headlong into the pit he dug for himself 
when he confounded money with capital. Hav- 
ing classed money as capital, he is bound to class 
interest as profit, and this necessitates his divid- 
ing all production just as he does, because as he 
has no factors of production but land, labor and 
capital, and no factor of distribution at all, he, 
from his standpoint, logically concludes that all 
the production must go to one of these factors ; 
that is, all production must go to land, labor and 
capital, or is divided to land as rent, to capital as 
profit (or interest), to labor as wages ; just in ac- 
cordance with the above statement of Ricardo. 
This runs him up against a circumstance. In 



58 CURRENT THEORIES DISPROVED. 

book ii , chapter iv., he discusses under the head 
of " Spurious Capital" such things as bonds, 
notes, mortgages and the like, which he very 
properly states are not capital, only representa- 
tives of capital. Nevertheless, he knows that 
there is distributed annually to the holders of 
this "Spurious Capital" a large amount of that 
same production. Now, where does he account 
for this payment in his distribution ? He can- 
not say it goes to capital, for bonds or notes are 
not capital; not to labor or rent, certainly. He 
has not done anything with it at all. He has 
no place to put it under his classification. This 
payment to " Spurious Capital " comes out of 
production, but cannot be paid to any factor of 
production mentioned in Ricardo's law. The 
law is not a full statement of distribution. It 
must have another factor, the factor of distribu- 
tion, i c, money. Then there is a place found 
to distribute this payment to " Spurious Capital." 
It is interest, and the statement can then be 
properly made of production. It is: 

Production=Rent -f wages + profit -f- interest. 
Or, 

Production — Interest=rent, wages and profit. 

In other words, Mr. George proceeds to make 
distribution without any reference to the pay- 



CURRENT THEORIES DISPROVED. 59 

ment of these vast sums of money, as interest, 
upon this character of obligations and in utter 
oblivion of the effect upon results. None of them 
are capital, and the money was not paid on ac- 
count of capital, or to capital, or to any one for 
the use of capital. They are national, state, mu- 
nicipal, town, county and corporate bonds. All 
railroad, turnpike, water or sewer bonds, mort- 
gages, promissory notes, discounts of all private, 
state or national banks, etc., etc. In brief, the 
total of such payments, each year, in the United 
States alone, amounts to the sum of $1,200,000,- 
000, and I presume they are no less, proportion- 
ately, in other countries ; a sum too great for 
comprehension, but, to give some idea, we will 
suppose all voters are laborers, and that in round 
numbers they are $10,000,000, and that this sum 
paid to lt Spurious Capital" would represent the 
labor of the whole body of such voters at $1.50 
per day for seventy-five days each year, or just 
about one-quarter of the gross earnings of labor. 
All this is, by this rule of Ricardo and mode 
of distribution, accredited to rent, wages and 
profit, when it actually goes to some one else. 
The interest paid to these bonds comes out of 
production, but it is not paid to capital or land 
or labor. It is paid to the gentlemen who fur- 



60 CURRENT THEORIES DISPROVED. 

nish the agent of distribution, called money, as 
payment for its services, and in that capacity and 
no other. 

This solution of Mr. George is very much as 
though he should attempt to solve a problem in 
algebra as follows, to wit : 

Three known streams (R. W. and P.) run into 
a cask; the spigot (I.) is wide open all the time; 
how much in the cask, without taking any ac- 
count of the spigot ? He fails. There is no so- 
lution. Omnipotence could not do it. 

The law of Ricardo is not broad enough to 
cover the field of production. It leaves out one 
of the factors everywhere present, which is 
actively modifying the effect of the law. It for- 
gets the spigot. Even if it is good, so far as it 
goes, where then does it go? We cannot say it 
governs the margin or wages, or even rent, until 
we know what modifying influences are exerted 
by this other factor which it ignores. 

I have shown that capital changes the margin, 
raises and lowers rent, now money controls the 
storing of capital. If, then, the margin controls 
wages, and capital controls the margin, and 
money controls capital, which controls ? 

I think that, taking into account these modi- 
fying influences in open competition in produc- 



CURRENT THEORIES DISPROVED. 6 1 

tion, the law of Ricardo has more of a fanciful 
than a real influence in society. Wrong thus in 
fundamental principles it must contradict obvious 
facts. 

Rent potential is not rent actual. The power 
to demand rent does not compel any one to pro- 
duce rent, nor does it determine who receives 
the rent, as a simple illustration will show: "A." 
works land which produces 3 per cent., with bor- 
rowed capital at 6 per cent., of one-half the value 
of the land. Borrowed capital gets the whole 
product. 

"B." owns land. He puts a mortgage upon 
it of one-third its value at 6 per cent. Who gets 
one-half the rent? 

If the theory of Mr. George was true, all any- 
one would be compelled to do would be to bor- 
row money, buy land and let rent make him 
rich. He might succeed once in a thousand 
times, but it would hardly do for the whole com- 
munity to engage such a belief. The universal 
truth known to all business men, that land is 
held as security for loans of money at not to ex- 
ceed one-half its value, and then only for a 
limited time, is evidence that there is something 
which absorbs production faster than land values. 

One of the writers upon land values, I think it 



62 CURRENT THEORIES DISPROVED. 

is Cary, by a careful computation of the amount 
of capital and labor expended upon land, demon- 
strates that the cost of capital, adding average 
interest upon money, together with the cost of 
labor at margin, wages, and, like interest, would 
exceed the total value of land and improvements. 
And why should not capital have its compensa- 
tion and labor its reward ? 

What is reckoned as land values, is not natural 
power, but the power given to it by adding labor 
and capital, and when unoccupied land rises in 
value, it is the result of the contributions of all 
the owners alike, and where land is left free to 
the ordinary rules of competition is the most 
universal, and as each one in the community 
have contributed to this advance, is the most 
equitable distribution of advancing wealth. 

That labor and capital are supreme, and not 
controlled by the margin, is proven by the fact 
that, whenever land is left open to competition, 
labor will own the land. Where landed aris- 
tocracies exist, it has been found necessary, in 
order to keep the land from following the natural 
law of acquisition, to interpose legal barriers, 
such as laws of entail. This has lately been il- 
lustrated, in the attitude of the Gladstone minis- 
try toward the Irish people. They proposed to 



CURRENT THEORIES DISPROVED. 63 

subject the land of Ireland, enhanced in value by 
hundreds of years of cultivation, to a term of 
purchase of thirty years, with money at low 
rate, and the Irish nation, which has been kept 
from the land by the operation of monopolistic 
laws, hail this as a means of giving the land to 
the people. 

The fact is that labor employed directly upon 
land in the production of raw products, giving it 
rent and profit and all as wages, works the 
hardest, the most hours, and for the poorest com- 
pensation of any portion of the community. No 
millionaires are found among them, and though, 
by a lucky purchase of land, in the midst of a 
growing and prosperous community, many may 
be made wealthy, and one Astor, a many times 
millionaire, thousands upon thousands find them- 
selves land poor, while millionaires multiply 
by thousands, none of whose acquisitions can be 
traced to the Ricardo law of rent. 

The disproof of the theory of Henry George, 
is found by taking his sylogism in reversion. If 
the cause of poverty is rent, no poverty can exist 
where opportunities are free above the margin. 
This condition exists now, did yesterday and has 
always existed in the United States. Yet there 
are those who don't work, can't get work, and 



64 CRRUENT THEORIES DISPROVED. 

would be glad to work at one-half the wages 
made upon the poorest land in use to-day. Why 
don't they work ? Let the poorest, half-starved, 
half-fed laborer, just walk either way half 
across the island of New York, and in front of 
him is land plenty and free. There is the East 
River and the North River, and the boundless 
ocean just beyond — land, land all. Take, use, oc- 
cupy without stint and without price. It is 
above the margin, for thousands are using it 
every moment. Why don't any believer in Mr. 
George do it? He tells them that the reason 
wages are so good in new countries, is because a 
mar. can step over on the next quarter section 
and work for himself. Any man can make a 
boat as cheap as he can make a house. Any 
man can own a fair canal boat as cheap as he 
can buy a team, a plow, seed, planters, and break 
the soil and open up a prairie farm. Why don't 
they occupy? Why, within six days' walk of 
New York city are farms which could always be 
had for taxes — can be occupied for twenty years 
without rent. Why don't the poor, starving hu- 
manity walk out and enjoy a feast of fat things 
in this new-found way of becoming well fed? 

The theory of Mr. George is not one that 
touches the wants of those who need help. All 



CURRENT THEORIES DISPROVED. 65 

he proposes is a little better divide of the present 
production, making these who are in, a little 
more comfortable. Those who are out, who are 
below the margin, who don't work, or but half 
the time, they want no divide of rent. If all di- 
vided, it would not amount to a day's work a 
year. What they want is three hundred days' 
work each year. They want the wonderful re- 
sources everywhere present, around and above 
them, opened up and made available to them, so 
with songs of joy they can go out and gather 
with their labor, and bind and bring in the 
golden sheaves of plenty, to homes where glad- 
ness and contentment reign. 

The pretty pictures which Mr. George draws 
of times when nobody shall pay taxes, except 
those who occupy lands, throws into relief 
another, which, under existing laws, but more 
especially under the arrangements proposed by 
Mr. George, might be drawn. 

Down in the valley, the capitalist places his 
mill, (capital) upon a barren rock, worth nothing. 
In this he collects machinery of the value of 
hundreds of thousands of dollars. Around go 
the wheels merrily, driven by an engine (capital), 
fired by coal, and scatters his products to the 
four winds, collecting profits by thousands, and 



66 CURRENT THEORIES DISPROVED. 

pays wages at the maximum because he pays no 
rent or taxes. One of his employees looks 
longingly upon a little glebe on the hillside, in 
full view, and, collecting the remnant of his 
wages, he occupies the same under Mr. George's 
rent-tax arrangement. 

He plows a little land, not much, for every 
furrow adds to the value of the land and rent. 
He plants a few trees, for, as they grow, the tax 
gatherer will surely increase the rent (Mr. George 
says everything which becomes indissolubly at- 
tached to the soil is land), and so he toils from 
sun to sun, and his crops grow, and his rent 
grows. By and by comes a June frost and the 
rent is not paid, and the tax gatherer exposes 
his little stock to sale. No one bids among his 
neighbors, for they are in as much trouble as he. 
Up steps the mill owner, and out of the profits 
which pay no taxes or rent, buys his improve- 
ments, and then sells them to him or loans them 
to him at such rate of interest as to make him 
his slave, worse than the man at the margin. 

Who can prevent it? What can prevent it? 
Mr. George don't answer. 

I shall try to do so. 



DISTRIBUTION. 6j 



BOOK II. 



Distribution. 



In what manner the products of industry, are ap- 
propriated, or shared by different classes in 
society. 

Introduction. 



Four classes divide the products of labor — to land 
goes rent, to labor wages, to capital profit 
and to money interest. Laws of distribu- 
tion not understood and why. 



From what has already been written, I think it 
will readily be admitted, that the factors of pro- 
duction are not responsible for the unequal con- 
ditions of society, and that no one of them is a 
necessary bar to the equal enjoyment of the 
fruits of industry. I shall, therefore, turn to the 
law of distribution, in the hope of finding the 
process by which a few gather the bulk of the 



68 DISTRIBUTION. 

products of labor, a large majority are reduced 
to a bare living and many to absolute want. 
The obvious injustice of the results of prevailing 
laws of distribution have led to the promulga- 
tion of many theories intended to mitigate the 
evil consequences flowing therefrom. These may 
be classified generally as belonging to one or 
the other of opposite theories of government: 
On the one hand socialism, or that class who 
claim that it is the function of government to 
take charge and control production and distribu- 
tion for the equal benefit of all; on the other 
hand, the government of freedom, where the 
duties of government interfere with individual 
action, only enough to enforce the possibility of 
equal competition. This latter theory of free 
competition, is the one upon which is built ad- 
vanced civilization, and is generally conceded to 
be the true theory of government. Present re- 
sults of distribution cast doubt upon this claim, 
and unless it can be shown that the laws of dis- 
tribution are controlled by social or political en- 
actments, which contravene their just action 
under free competition, the claims of socialism 
are well nigh established. I think it can be 
shown that they are thus controlled, and that 
the power vests in government, which, properly 



DISTRIBUTION. 69 

executed, will result in their operation in con- 
formity to the requirements of justice, equality 
and perfect freedom. 

The process or manner of production and dis- 
tribution, stated in brief, is as follows : 

Labor, using capital upon land, produces raw 
products. Capital and labor transport and de- 
liver raw product to the merchant, who dis- 
tributes back the value of the same to land, labor 
and capital, by the payment of money. The 
merchant ships them to the manufacturer and 
receives the amount of the original purchase, 
adding thereto, storage, interest, wages and trans- 
portation. Labor uses capital in the form of 
machinery; grinds, spins, weaves and fashions 
raw products for consumption, and delivers the 
finished product to middle men, who again dis- 
tribute to the manufacturer the original value, 
the added value, while in the merchants the 
transporters and the manufacturers' hands. The 
middle men deliver these finished products for 
final consumption, when all men get the real pay 
for labor, for profit and for rent. Mr. Adam 
Smith says : " The real wages of labor are the 
products of labor." 

To illustrate : Labor, using the horse and plow, 
prepares the land, plants cotton seed, tends the 



JO DISTRIBUTION. 

plants, picks the cotton; with machinery gins, 
bales, and transports raw cotton to the merchant 
or broker, who exchanges money for the same, 
by which is distributed to each factor of produc- 
tion its share of the product; to land rent, to 
labor wages, to capital profit. And now the price 
of the cotton stands as, (rent -f- wages + profit). 
The broker stores it and ships it to the manu- 
facturer. He adds to the original price, interest 
on money, wages for handling; also his own 
wages, storage (rent and profit); also the cost of 
transportation, and this when analyzed is, rent-(- 
wages+profit+interest. The cost of the cotton 
now stands: (R. + W. + P.) + (R. + W. + P.+I.) + 
(R.+W. + P. + L), the value of all of which have 
been distributed to each of the several factors by 
money. And so on, through each successive 
stage of spinning, weaving, transporting, until, 
in finished cloth, are concentrated all the in- 
numerable items of wages, rent, profit and in- 
terest. This men receive and pay back the 
money which they had received as the represen- 
tative of wages, profit, interest or rent, and thus 
have the real object of all human effort, that 
which satisfies human desires. That which is 
received as wages is always composed of 
R.+W. + P. + I. 



DISTRIBUTION. 7 1 

The process of production and distribution, 
from their incipiency to finality, go on inces- 
santly in society. Distribution is the indispensi- 
ble link in the chain of production, and both 
together constitute the warp and woof of the end- 
less web we call agriculture, manufacture and 
commerce. All the products of industry are in- 
tended for consumption, that is, to satisfy human 
desire. Money, in an economic sense, is never 
consumed and satisfies no want of man; and, 
while it appears between every stage of produc- 
tion, it adds nothing to the product or its value. 
It is always an exchange of equivalents — always 
as a distributor, never as a producer. While it 
adds nothing to value it almost always adds to 
cost. While, therefore, it is proper to say that 
the factors of production are three, land, labor 
and capital; when we come to distribution, there 
are four factors which divide the product. 

Land, labor and capital produce. 

Land, labor, capital and money divide the pro- 
duct. 

Or, as we have designated, the proportion 
heretofore which goes to land as rent, to labor 
as wages, to capital as profit, and to money as 
interest, the proper algebraic expression would 
be : Production=R. + W. + P. + I. 



J2 DISTRIBUTION. 

In order to arrive at any just appreciation of the 
laws of distribution, it will be necessary to as- 
certain the relation of each factor of distribution, 
also the amount of the gross product, which is 
naturally due and appropriated by each It will 
not only be necessary to apprehend these laws, 
but their relation, and effect upon each other, for 
they are evidently correlative. What goes to 
wages and why, cannot be ascertained until we 
know what goes to rent, profit and interest, and 
why. In a given state of production wages can- 
not rise, unless one or all the other factors of 
distribution fall. And what is the most extra- 
ordinary part of the whole matter is, that I am 
compelled to discover and bring to light all the 
laws of distribution, as well as their relation and 
co-ordination. All political economists have 
failed to apprehend these laws or their relations. 
They each have theories of their own, and all 
seemingly start in from the same premises, go 
by different roads to different conclusions, one, 
apparently, as plausible as the others. What is 
so seemingly strange is not at all strange, after 
a little examination. We have not very far to 
go to find the cause. It has its origin in the 
fruitful source of ambiguity we have been point- 
ing out from the beginning. It is the failure of 



DISTRIBUTION. 73 

these economists to see the logic of their own 
work. Smith, Mill, Ricardo, Bastiat, in fact all 
economic writers, both great and small, assert 
that money is a distributor of wealth, not a pro- 
ducer. They call the return to money interest, 
as Adam Smith says, " A derivitive revenue." 
They call the return to capital, profit, yet, when 
they come to distribute wealth, they never make 
any place for interest. As Mill says, the 
whole community for the purpose of distribution, 
consists of three classes, landlords, laborers and 
capitalists, and they proceed to try to show how 
all wealth produced is divided between them. 
Now, any child can see, as do all these econo- 
mists, that the holder of interest-bearing notes 
at six per cent., of the amount of one hundred 
thousand dollars, is drawing each year, as inter- 
est, six thousand dollars of wealth out of pro- 
duction. It is not the product of the notes, or 
of the money, not paid to capital, or the owner 
of capital, because the notes are not capital. How 
can you make any sensible division between rent, 
wages and profit until you have ascertained the 
amount of interest and taken it out ? It cannot 
be done. Interest modifies the amount which 
can go to the other factors of production, under 
all circumstances, to the extent of its gross 



74 DISTRIBUTION. 

amount. It again modifies their proportion as it 
rises and as it falls, and, as I have shown, it mod- 
ifies the power of labor to produce capital, to in- 
crease capital; it modifies the employment of 
labor, the quantity of production, changes profit, 
absorbs rent, and yet it is entirely left out of 
every work on political economy as a part of dis- 
tribution. 

Startling as it may seem, I am justified in say- 
ing that there has never been any exposition of 
the laws of distribution worthy of any consider- 
ation whatever, or that have approximated to the 
explanation of existing facts. They are a cut 
and a try to fit impossible theories to exact facts. 

Hence, it is not surprising to find Mr. Adam 
Smith telling us, that the laboring classes in 
England have steadily improved in the last two 
centuries, and Malthus, a few years later, telling 
us that the pressure of population was steadily 
driving men to the verge of poverty ; and to find 
Ricardo asserting that wages must go up, and 
Mr. George that they must go steadily down, 
both basing their theories upon the same sup- 
posed law. I shall, therefore, be compelled, at 
this late day, to go before and open up the road 
to unjust and just distribution. 

The compensation to the loaners of money, 



DISTRIBUTION. 75 

being a derivitive revenue, comes out of the fac- 
tors of production, i. e., reduces the amount 
which goes to one or all of them. It must come 
out before distribution to R., W. and P. As pro- 
duction stands ready for distribution, it should 
be expressed therefore : 

Production— L= R. + W. + P. 

Now, under existing conditions, and those 
which have existed, when the law of competition 
is supposed to have its sway, every laborer is a 
competitor with every other laborer. Along 
this class, if nowhere else, does the law of 
competition hold perpetual sway, so that what- 
ever has been the amount of production to be 
distributed, it has always been naturally, or by 
social adjustment, arranged so that this competi- 
tion was kept keen and constant ; enough to drive 
the laborer to about the lowest point of subsist- 
ence possible to maintain existence. From which 
circumstance all economists, without really know- 
ing the cause, claim that this is the natural con- 
dition of wages, and have framed their theories 
accordingly. 

This sum, that is the total of wages, must 
come out of production at all events, or the de- 
struction of society will ensue. 

It is safe, in an approximate estimate, to say, 



y6 DISTRIBUTION. 

that this is consumed each year, and that the re- 
mainder is all that can be divided between rent, 
profit and interest. This is the net income of 
society, or the average increase of wealth. Now, 
as I have shown, interest is a "derivitive reve- 
nue:" a sum certain — takes no chances — and must 
come out before profit or rent. If, therefore, in- 
terest equals this net revenue there will be noth- 
ing left for profit and rent. Profit and rent are 
the uncertain factors. 

If there is a surplus, after paying interest, it will 
go to profit and rent, and if they do not get all, 
wages may rise. These propositions may be 
stated succinctly thus : 

Production — consumption=net revenue. 

Net revenue may be less than interest, in which 
case the balance of community go farther in 
debt to the venders of money. 

Net revenue may be about equal to interest, 
when society will just pay expenses, and venders 
of money will receive all surplus production 

Net revenue may be more than interest, when 
interest will be paid, something go to profit and 
rent, and possibly to wages. 

Every one of these conditions are possible in 
any nation, have occurred in almost all, and in 
them is the explanation of relations, which can 



DISTRIBUTION. JJ 

be understood under no system of political 
economy extant. They are the arbiters of des- 
tiny. The tread of their feet is the march of 
centuries, and as they pass and repass the song 
of joy or the wail of anguish has come up 
through the ages. 



y8 RENT. 



CHAPTER I. 



Rent and the Law of Rent. 



Rent is the compensation for the original and 
indestructible powers of land — Is limited to 
the insignificant difference of the natural 
productiveness of the soil. 



The extent to which rent enters into distribu- 
tion, and the relation it bears to the other fac- 
tors of distribution, is modified by two consider- 
ations : 

ist. The extent of the field of production 
over which rent extends. 

2nd. The amount of the production which 
rent absorbs where it prevails. 

It is self-evident that the influence of rent 
upon the other factors of distribution, will be felt 
only in a modified sense in any field of produc- 
tion, where rent does not directly enter. Thus, 



RENT. v 79 

the seas and oceans are always open to labor and 
capital, and subject to interest. They are free 
to any and everyone. If, then, upon all other 
fields of production, it were true that wages were 
driven low by rent, here would be a resort for 
labor which would modify the effect of wages 
upon land. The seas and oceans, lakes and nav- 
igable rivers, must be excluded when we seek to 
define the law of rent, or its influence upon 
wages. Here wages are all the products over 
profit and interest. The same may be said of 
all professions, bankers, musicians, teachers, 
public officers and soldiers. Rent neither enters 
into, absorbs, or modifies their wages, except in- 
cidentally. 

In the second place, from all calculations 
upon rent must be excluded all improve- 
ments upon land, and all values commonly ac- 
credited to land from such improvements. Ri- 
cardo says, " Principles of Political Economy/' 
chapter ii. : 

' ' Rent is that portion of the produce of the earth 
which is paid to the landlord for the use of the original 
and indestructible powers of the soil. It is often, how- 
ever, confounded with the interest and profit of capital, 
and, in popular language, the term is applied to what- 
ever is annually paid by a farmer to his landlord. If, of 
two adjoining farms of the same extent and of the same 



80 RENT. 

natural fertility, one had all the conveniences of farming 
buildings, and, besides, were properly drained and 
manured, and advautageously divided by hedges, fences 
and walls, while the other had none of these advantages, 
more remuneration would be naturally paid for the use 
of one than for the use of the other; yet, in both cases, 
this remuneration would be called rent. But it is evi- 
dent that a portion only of the money annually to be 
paid for the improved farm would be given for the origi- 
nal and indestructible powers of the soil. The other 
portion would be paid for the use of capital which had 
been employed in ameliorating the quality of the land, 
and in erecting such buildings as were necessary to se- 
cure and preserve the product. Adam Smith sometimes 
speaks of rent in the strict sense to which I am desirous 
of confining it, but more often in the popular sense in 
which the term is usually employed. He tells us that 
the demand for timber, and its consequent high price in 
the more southern counties of Europe, caused a rent to 
be paid for forests in Norway which could before afford 
no rent. Is it not, however, evident that the person who 
paid what he thus calls rent paid it in consideration of a 
valuable commodity which was then standing on the 
land, and that he actually repaid himself with a profit by 
the sale of the timber? If, indeed, after the timber was 
removed, and compensation were paid to the landlord for 
the use of the land for the purpose of growing timber, or 
any other product, with a view of future demand, such 
compensation might justly be called rent, because it 
would be paid for the productive powers of the land ; but 
in the case stated by Adam Smith, the compensation was 
paid for the liberty of removing and selling the timber, 
and not for the liberty of growing it. He speaks also of 
the rent of coal mines and of stone quarries, to which 



RENT. 8 1 

the same observation is applicable, that the compensa- 
tion given for the mine or quarry, is paid for the value of 
the coal or stone, which can be removed from them, and 
has no connection with the original and indestructible 
powers ox the land. 

"This is a distinction of great importance, in any in- 
quiry concerning rent and profit, for it is found that the 
laws which regulate the progress of rent are widely dif- 
ferent from those which regulate the progress of profit 
and seldom operate in the same direction." 

Thus, if Mr. Ricardo knew anything of the 
law which bears his name, before we commence 
to compute what rent absorbs, we must exclude 
all value added by fences, ditches, tile, all addi- 
tions of fertility by plow, all trees planted, all 
vines and shrubs, houses, out-houses and barns 
and graneries. Whatever portion of the pro- 
duct upon agricultural land, which is necessary 
to be used to store, to keep and maintain these 
improvements is paid to labor and capital, and 
is the absortion of wages and profit, and not of 
rent. The improvements upon agricultural land 
amount, probably, to three-tenths of its assessed 
value, and one-tenth of its real value. Also, we 
must exclude all the valuation of all mines of 
coal or iron, all quarries, all standing timber, 
and remember that all labor employed in remov- 
ing and marketing these products is not gov- 
erned by rent, or the law of rent. 



82 RENT. 

In the third place, the value of land which 
arises from other causes than its natural powers 
of productiveness, or the relative worth by- 
reason of its nearness to market, must be totally 
excluded in calculated rent or its influence upon 
wages. Thus, the price of all land used ex- 
clusively as a place upon which to erect and use 
capital is governed by the law of profit, not that 
of rent. A city lot upon which is placed a manu- 
facturing establishment may be valued at thous- 
ands of dollars, but it owes its value to the pro- 
ductiveness of capital planted thereon, and not 
to the original and indestructible powers of 
land. All the original powers used under such 
circumstances, are the powers of attraction of 
gravitation to hold the building down, and the 
power of inertia to hold the building up. Rent 
is the return for the contribution which the 
powers of land afford to production — a part of 
this contribution. Where there is no such con- 
tribution there can be no rent. The rental value 
of a city lot is what it would be worth to culti- 
vate. The increased price arises not from in- 
creased production or price of production, but 
from the increased power of capital and money 
to absorb production — to absorb production in 
excess of cost of labor and replacement of capi- 



RENT. 83 

tal; in other words, to get profit and interest. 
It is on precisely the same principle as an invest- 
ment at interest and on the same grounds ; be 
cause the capital stored upon it will pay wages, 
interest upon the value of the land, and profit 
equal to interest, on the capital employed. If 
there was no interest or profit there could be no 
increased value in the land. This increased 
value or price of land is erroneously called the 
11 unearned increment" in land, because it arises 
from the increased exchange by reason of the 
increase of population. It is really the " un- 
earned increment" of the power of capital and 
money to absorb production, and has no relation 
to rent whatever. Mr. Ricardo always made this 
clear. Mr. George and many others are con- 
fused by not making a distinction so palpable. 
So, all the price which attaches to land in a 
manufacturing town and large cities, or in their 
vicinity, which are valued very high because of 
their desirableness for location for homes, on ac- 
count of nearness to schools, lyceums and social 
intercourse ; it is not on any principle of pro- 
ductiveness, nor is it the representative of eco- 
nomic rent, past, present or potential, but that of 
the means of satisfying taste and desire, and it 
would be just as correct to call a pleasure car- 



84 RENT. 

riage capital, as to call such price land values, in 
the sense of rent values. 

In the fourth place, in calculating the relative 
power of rent to absorb the products of industry, 
we must exclude all factories, workshops, mills 
in which all the products are almost exclusively 
composed of P. + W. + I. and rent hardly enters; 
also all railroads and telegraphs, as these employ, 
of capital to land (mostly easements in land), in 
about the proportion of twenty to one, and rent 
can absorb but this proportionate trifle to de- 
crease wages. 

After we have thus excluded from the influ- 
ence of rent the great bulk of the field of pro- 
duction, and brought it down, as, in fact, it 
really should be, and always is by Ricardo, to 
the natural powers to produce, as they stood be- 
fore the hand of man had wrought any change ; 
in the fifth place, it must be remembered that 
rent is not all the return which is given by these 
natural powers, but the difference between the 
highest and lowest production, after paying in- 
terest, wages and profit, of land necessarily used 
for agricultural purposes. Thus, if at the margin, 
land which is equal to the poorest land in use, 
on the average, is held at $15 per acre; for in 
stance, in Dakota or Kansas and land in the 



RENT. 85 

state of New York, which was never marked 
(but away from the speculative influence noted 
above and which has produced what might be 
termed fancy prices), should be found to be 
worth $40 per acre, the difference, or $25 per 
acre, would be the rental value of the best land, 
according to Ricardo, and the rent would be the 
average net increase of wealth upon lan4, or 
about 2 per cent., or about 50 cents, per annum 
per acre. On such statement this would be the 
total of the production which could be credited 
to economic rent, and I think the statement is 
not far from correct. [Table iii. of the appendix 
shows that the actual return in the United States 
for 1880 was 25 cents per acre for all agricul- 
tural land, assuming the farmer paid no interest. 
This would make, say 50 cents for the highest 
rent and from that down to zero. How much of 
this is creditable to speculative value, or is re- 
quired to make good the profit on capital, which 
has as good a right to the same as the land, it is 
impossible to guess.] 

While this as a general statement, is correct, 
yet it must always be borne in mind that it mat- 
ters not what the price, or difference in price of 
land, if the land at the margin produces enough 
more corn or other products, so that when mar- 



86 RENT. 

keted the net receipts are equal, there is as be- 
tween these lands no economic rent. That is to 
say, if a farmer in Kansas produced sixty bushels 
of corn to the acre, which nets him at the crib 
20 cents per bushel, and the New York farmer 
on the same expenditure of capital and labor 
produces forty bushels, which nets him 30 cents, 
as between these lands there is no economic 
rent; no matter what their price, and so of cot- 
ton and wool. Cheap transportation and change 
of markets constantly equalize the relative pro- 
ductiveness of land, and should the time come, 
that freights should be reduced to a minimum, 
the high priced lands of the East would cease to 
receive rent at all, and the lands still lower in 
price would receive rent, its relative natural pro- 
ductiveness overbalancing the nearness of the 
other to market. And so of cotton or wool, 
lands which cost nothing comparatively being 
far from markets and not desirable for heavy 
cereals, producing products, whose cost of trans- 
portation is relatively very low, as compared 
with their price, such lands may bring a large 
return to the acre and have economic rent. 

When the arbitrary power of rent is thus re- 
duced almost to zero, it must again be curtailed 



RENT 8? 

in an amount which will, as far as possible, 
equalize the profits of capital. 

It is a proposition that will not be disputed 
that capital used upon land increases far below 
the rate of capital expended upon the products 
of land. Land is productiveless without capital 
and labor, and capital will not seek land only, as 
I have shown, with the hope of return equal to 
the average return from capital, or from neces- 
sity. Therefore, when capital is used voluntarily 
upon land it must and does demand its return 
before rent. If there is not enough return to 
pay capital and rent, capital will have its return 
or will be turned into other channels. In either 
event rent suffers. 

I have thus brought the influence of rent upon 
the other factors of production to the place it 
occupies in distribution, by the law of Ricardo. 
The amount of its influence is so insignificant as 
to be hardly perceptible under any system where 
land is free to purchase and sale ; but the story 
does not end here; this is not the end of distri- 
bution. When the farmer has gathered his pro- 
ducts into his graneries, which constitutes his 
rent, wages and profit, or the land owner his 
proportion in money or kind, which constitutes 
his rent, then with him commences distribution. 



88 RENT. 

He must then exchange these things for those 
things which go to supply necessities, such as 
clothing, groceries, doctors' bills, education, lux- 
uries, fuel. Let us see how he stands at the end 
of distribution, and what has become of his rent 
and wages. In speaking of the products which 
comes from land, and in which rent enters, I am 
speaking of raw products. 

Into the cost of raw agricultural products labor 
largely enters. It is safe to say that seven-eights 
of such products can be called labor. (See 
table V). 

Thus, raw products=J^ labor+^ rent, pro- 
fit and interest. 

Now, when these raw products go through the 

process of manufacture and transportation, 

wherein the vast amount of addition to cost is 

profit and interest, by use of machinery and 

money, which bear a much greater proportion 

than labor, the cost will be found to represent 

not over three-fifths, or sixty per cent, of labor. 

Thus Adam Smith says : 

1 ' In reality high profits tend much more to raise the 
price of work than high wages. If in the linen manu- 
facture, for example, the wages of the different working 
people, the flax dressers, the spinners, the weavers, etc., 
should all of them be advanced twopence a day, it would 
be necessary to heighten the price of linen only by a 



RENT. 89 

number of two pence equal to the number of people that 
had been employed about it, multiplied by the number 
of days during which they had been so employed. That 
part of the price of the commodity which resolved itself 
into wages would, through all the different stages of 
the manufacture, rise only in arithmetical proportion to 
the rise of wages. But if the profits of all the different 
employers of these working people should be raised five 
per cent., that part of the price of the commodity which 
resolves itself into profit would, through all the different 
stages of manufacture, rise in geometrical proportion to 
the rise of profit. The employers of the flax dresser 
would, in selling his flax, require an additional five per 
cent, upon the whole value of the material and wages, 
which he advanced to his workmen. The employers of 
the spinners would require an additional five per cent., 
both upon the advanced price of the flax and upon the 
wages of the spinners. And the employers of the weavers 
would require a like five per cent., both upon the ad- 
vanced price of the linen yarn and upon wages of the 
weavers. In raising the price of commodities, the rise 
of wages operates in the same manner, as simple interest 
does in the accumulation of debt. The rise of profit 
operates like compound interest. Our merchants and 
master manufacturers complain much of the bad effect 
of high wages in raising the price, and thereby lessening 
the sale of their goods, both at home and abroad ; they 
say nothing of the bad effect of high profit. They are 
silent regarding the pernicious effects of their own gains. 
They complain only of those of other people. 

The large addition of price, therefore, which 
appear between raw products and finished pro- 
ducts, is mostly profit and interest. Thus, a 



90 RENT. 

yard of cotton cloth, which as cotton costs two 
cents of labor, appears, as rent, profit and in- 
terest, four cents, and labor two cents, or gross 
cost to the consumer — six cents, or 66 per cent. 
R. + P. + I. and 33 per cent, labor. A sack of 
flour has about 60 per cent, of labor and about 
40 per cent, of R. + P. + I. It is safe to assume 
that, if 12^ per cent, is the amount of labor in 
raw products, not over 60 per cent, of cost will 
be labor in finished products. Now, these fin- 
ished products are the real return, or pay, which 
the producer of raw products gets as his pay for 
rent, wages and the use of his capital. He can- 
not eat wheat or wear wool. 

Now, to see how the producer of raw products 
comes out at the end of distribution, by examin- 
ing the subjoined tables, it will be seen one 
man's labor in farming one hundred and thirty- 
four acres is represented as follows : 

He receives as wages $391.92 

He received as rent, profit and interest 60.38 

Total $452.30 

Now he receives in exchange finished pro- 
ducts, which are composed as follows : 

R., P. and I., 40 percent $180.92 

Wages — labor 60 per cent 271.38 

Or, in other words, the R. P. I. in the finished 



RENT. 91 

products absorbs not only all his own profits, 
all his interest, all the rent (with which Mr. 
George finds so much fault), but takes out of his 
wages $120.54, which goes to augment the profit 
or interest of somebody else. Thus Ricardo's 
law of rent stops too short to find out where 
distribution ends or determine wages or anything 
else. 

This demonstration utterly does away with the 
theory of rent as now scientifically held by most 
writers upon this subject, who follow in the 
wake of Ricardo Facts had already demon- 
strated that none of the necessary conclusions 
which result from the law were true. That 
wages did not go down, as Ricardo says they 
must ; that prices did not go up, as Ricardo says 
they must; that land does not absorb its pro- 
duct, as Mr. George says it must; in short, that 
the law was no law, or rather there was another 
power or influence which they had not dis- 
covered, which overruled the law and rendered 
it neugatory. This is by this demonstration 
made plain. The law of profit and interest over- 
rides and utterly destroys all conclusions usually 
supposed to depend upon this law. The attrac- 
tion of gravitation brings water to the earth. 
We do not, therefore, conclude that all water is 



92 RENT. 

found on the earth ; other powers carry it back 
and scatter it through the atmosphere. The patent 
error in the Ricardo rent theory is in the as- 
sumption that there is but one rate of agricul- 
tural profit, and in entirely overlooking the fact 
that interest on money is collected before rent, 
or out of it. Agricultural profit varies from zero 
to interest on money. Strictly speaking no rent 
can be paid for land or economic rent arise until 
profit has covered all direct and indirect interest 
and paid profit equal to interest. Hence, land 
may be poor to any degree that it brings the 
lowest wages and 1, 2 or 3 per cent, profit on capi- 
tal and yet have no economic rent — the differ- 
ence in natural powers, over wages being ab- 
sorbed by profit and interest, and they the 
cause of low wages and not rent. 

In a slight degree rent may influence agricul- 
tural wages, yet when this influence is thrown 
into the great vortex of production and the gen- 
eral average of wages from other and indepen- 
dent causes, is felt, there remains no perceptible 
influence upon wages from economic rent. As I 
have again and again said, I make no reference 
to the common use of the term as pay for the 
use of buildings, houses or grounds for other 
than productive purposes, as all such things are 



RENT. 93 

governed by the law of profit and not rent ; nor 
do I refer to the effect of the draught upon pro- 
duction, commonly called rent, in any country 
where the law of competition is countervailed by 
monopolistic laws or customs, such as exist in 
all European countries. Laws which prevent 
the natural law of acquisition, like laws of primo- 
geneture, or laws of entail, or such as give special 
right to land owners as the privilege of voting 
or holding office, and which has a tendency to 
give a special price to land above that which 
comes from its natural and indestructible powers, 
are and do constitute the basis of aristocracy. 
The power thus given to land to absorb the pro- 
ducts of labor and produce poverty is one of 
monopoly, created by law, and not the power of 
economic rent. 



94 PROFIT. 



CHAPTER II. 



Profit and the Law of Profit. 



A part of the return of production which by- 
right accrues to the owner of capital for its 
use in production. 



All production is usually credited to labor. 
From the prominence given to labor in the usual 
discussions of this subject it has grown to be a 
common ide^L that labor produces all wealth. 
Experience proves this to be far from the truth. 
The applied forces and powers of nature used in 
driving machinery constitute the greater portion 
of physical exertion which results in production. 
The exertion which man contributes is largely 
that of mental force and acquired skill in direct- 
ing the agencies of nature. Even when it be- 
comes necessary to exert the physical powers of 
man, the agencies of capital intervene and al- 



PROFIT. 95 

ways render this power more effective. The 
result of this contribution of physical energy by 
tools and machinery is a large increase of the 
acquisition of wealth, and is one of the causes of 
profit. 

The gross amount of this increase cannot be 
called profit. Capital, like all other wealth, is con- 
stantly consumed, only in a different way. It is 
worn out and destroyed in use. A certain 
amount of the increase above spoken of must con- 
stantly be used to replace this consumption ; a 
certain portion must go to pay insurance and 
taxes, which are a proper charge to replacement 
of capital, being the means of affording it pro- 
tection and security. This comes out of the 
gross earnings of capital before we can compute 
net profit. Also, with all dealers who, by col- 
lecting and handling capital, serve the conven- 
ience of the community, such as middlemen and 
merchants, who add a certain percentage to their 
goods, which is to cover not profit alone, but the 
replacement of waste, insurance, transportation, 
wages and interest on money. Profit is the net 
gain after taking out all such expenses. All 
these and rent are added to the price of the pro- 
duct and collected in the cost to the consumer. 
So, when I speak of profit, I mean the sum which 



96 PROFIT. 

is left to the producer for a return for the use of 
capital — something added to value in form or 
place capable of ministering to desire. This is 
the view taken by the best authorities on politi- 
cal economy. Adam Smith says of revenue: 
''That derived from stock by the person who 
manages or employs it is called profit. Capital 
is increased by parsimony." He also says that 
the motive to parsimony and the increase of 
capital is profit. This idea, as expressed by 
Simonidi, is, that abstainence is the means of 
storing capital, and the motive to abstainence is 
the increase gained thereby, or profit 

Adam Smith wrote nearly one hundred years 
ago. Wonders wrought in productive modes 
have, in this period, changed the whole condi- 
tion of society, and the increased supplies to 
meet necessities has rendered what might be con- 
sidered profligacy then, abstainence now. We 
accordingly find later writers (Mill and Bastiat) 
stating that while profit is the motive, the real 
" cause of profit is that laborers produce more 
than is required for their support ; " that the sur- 
plus of production, not required for rent, interest 
or wages, is profit. Writers upon the ethics of 
government have often questioned the right of 
the owners of capital to receive this return, and 



PROFIT. 97 

strong prejudice has been excited against capi- 
talists, by reason of the claim, that capital could 
justly receive only replacement, and labor was 
entitled to all the balance of production. Num- 
berless discertations have been written, both pro 
and con, among which are the elaborate defence 
of profit (he calls it interest) by Henry George, 
and the like defence of interest and profit by 
Bastiat. It seems to me, however, that one 
simple illustration by Ricardo had long before 
settled the whole question of the foundation of 
profit, and its justice. I use the illustration, but 
not Ricardo's words . 

A farmer expends labor and capital upon land, 
and gets a return, say, 5 net. He now tiles and 
fertilizes the land (this is simply adding capital), 
and by the same labor gets 6 net. He now buys 
improved machinery, and by the same relative 
labor gets 7 net. Rent is the same, interest the 
same; labor the same. To whom, if not to him, 
does the 1 and 2 belong, and what are they, if 
not additions to his wealth, or capital? And 
what are they to be called, if not profit? 
Wherever capital is used, no one will continue 
to use the same and produce for others, for less 
than they can produce for themselves, whether 
upon land, or the products of land, and so cap- 



98 PROFIT. 

ital can always demand as profit, an amount above 
the same which will induce labor to store, or re- 
place it. It hardly seems possible, that any one 
can deny that this return is just and equitable, 
who holds to the right of individual freedom, 
and the consequent right to the ownership of 
that which his own hand has created. 

Mr. George, however, says that the cause of 
profit ( " interest " ) " arises from the increase which 
the reproductive forces of nature, and, in effect, 
analigous capacity of exchange gives to capital." 
Barring the fact, that Mr. George always con- 
founds interest and profit, and that his definition 
of profit makes a close shave upon his definition 
of rent, it comes to just the same general conclu- 
sion, and it may be stated as the unanimous ver- 
dict, that profit is just, and an increase, a surplus 
of production, which goes to the owner of cap- 
ital as a return to him for the use of capital in 
productive modes. While it is universally ad- 
mitted that the surplus is profit, and that it is 
just, I must always insist upon two facts being 
kept in mind : 

1st. That the reward of profit is not the only 
motive for storing capital. 

2nd. That parsimony is not the source of 
capital. 



PROFIT. 99 

The controlling motive for storing capital is 
necessity. This preceeds all other motives. 
Without capital man would perish. They must 
apply their labor in order to procure bread, and 
their labor cannot be of avail without capital. 
Sustenance, they must have, whether anything is 
left for increase, as profit or not. As I have 
shown before, the vast majority of capital works 
for little more than replacement, and much of it 
at the margin of cultivation. Probably there is 
no more misleading nonsense, in all political 
economy, than the idea, growing out of the con- 
founding interest and profit, than, as Adam 
Smith says, " Profit is about equal to interest." 
If the profit of the agriculturist was equal to the 
interest on money, there would be a surprise- 
party for the inhabitants of the globe in about 
one hundred and fifty years. Let the stock hogs 
alone, of the farms, increase at 7 per cent., com- 
pounded for one hundred and fifty years, they 
would be about the only inhabitants of the globe. 
They would stand one deep over all the land, 
and a large share of the moon would have to be 
rented to furnish them standing room. In a very 
few trades and localities profit is made equal to 
interest. In all others, capital and labor work 
for just about replacement. So when we read in 



IOO PROFIT. 

economic treatise, that manufacturers and dealers 
must make wages of superintendence, interest 
and replacement of capital, the statement would 
be correct if changed to read: "They must make 
wages, replace capital, and profit equal to inter- 
est, if they can." If they make enough to pay- 
interest, and half as much on their own capital, 
they do well. 

The real source of capital increase, or of in- 
crease of wealth (both may be profit), will, I 
think, be found in the increased capacity to pro- 
duce by means of machinery, by a further di- 
vision of labor, by increased facilities of com- 
merce, so as to equalize values, and reduce rent. 
Whatever increases the amount of production 
over the demands of society, adds a proportion 
to profit, though how, and to what extent, modi- 
fied by interest and wages, remains to be seen. 



INTEREST. IOI 



CHAPTER III. 



Interest 



Is a " derivitive revenue," derived from the 
power of money to store capital, and hence 
the power to absorb whatever profit such 
capital makes in production. What is a 
just interest, what inflation, and what con- 
struction, defined. 



The subject of interest in no treatise, of which 
I have any knowledge, is discussed separately 
from profit. Its genesis, amount, ethics, influ- 
ence, and effects are all discussed in common, as 
one thing, with profit. The most casual obser- 
vation should convince anyone of the utter folly 
of such a blunder. Money is not consumed in 
an economic sense. Its use, or failure to use it, 
produces nothing. Therefore, under the princi- 
ple of abstainence, it is not saved, or under the 



102 INTEREST. 

surplus of its production interest is not attained. 
Plant it and water it, as Mr. George suggests, 
apply any or all " the reproductive forces of na- 
ture to it," and no extra dollars appear. Trans- 
port it, or use it in exchange, and its value is not 
increased (as is capital), but usually of less value 
by exchange, in the price of transportation. 
Taken in any view in which money is presented 
by political economists, interest is little less than 
robbery, as Mr. George remarks. Indeed, we 
find that while capital always expects profit, 
money in all the great work of facilitating dis- 
tribution, for which it was originally invented, 
thus aiding in the division of labor, expects, 
and, in fact, receives no interest. It is, then, an 
exchange of equivalents ; of value, for wealth, for 
which it pays. It is only when money is used 
to represent credit, or in storing capital, that 
money commands interest. As I have already 
shown, it is not a natural thing, but acquired. 
The potential power given to money, by the 
State, to extinguish indebtedness, carries with it 
the command of wealth, of capital, and all the 
natural use and function of capital under the 
natural law of competition. It is, therefore, a 
derivitive power, derived from the State, the 
direct action of government to interfere with 



INTEREST. IO3 

the laws of competition. In this, and this 
alone, arises the power to demand interest, and 
all the questions, therefore, which are commonly 
mooted, of the justice of interest, refers back at 
once to the question of what is a just, and nat- 
ural exercise of this prerogative of government. 
That there is a dim, vague, but widespread and 
universal impression, that interest is robbery, 
grows out of the failure of economists to clearly 
apprehend and state the just meets and bounds 
of interest. That all nations feel that interest is 
not a natural thing, or grounded in the same 
principles as profit, is proved by the futile at- 
tempts to regulate it, or curb the rapacity of 
money-loaners, by usury laws. Why not curb 
production by law, and regulate profit in the 
same way? Why not say that a man shall not 
raise but 18 bushels of wheat upon an acre? Just 
as much sense in one as in the other, if both are 
based upon natural justice. They are not. One 
is natural, and the other artificial. 

In order to ascertain whether a law, creating 
money, has been exercised in accordance with 
natural justice, the law of equal competion, so 
as to produce a just interest, and if not, to de- 
termine what ought to be done to produce such 
results, it will be necessary to examine the effect 



104 INTEREST. 

of interest upon society, in its relations to all the 
factors of production 

We have seen, that interest on money is col- 
lected out of profit, or rent, or both; that it is 
collected out of the consumer, by being added 
to cost. The first startling thing which presents 
itself, is, that interest, while it conforms to profit 
at the highest point of production, it is not paid 
by such profit, but is charged up on the products 
of industry, and collected out of the labor, or 
rent, or profit of all classes of community, 
whether working at the margin, or above. 

To illustrate : Farming communities work their 
capital and lands, and get the average of produc- 
tion, say 2 net. A capitalist sees a favorable 
location, to make agricultural implements, in a 
large farming community, and having $10,000, 
puts up works for this purpose. Needing more 
money, he borrows $10,000, at 6 per cent, inter- 
est, and purchasing stock pays therefore with the 
money. He has now to pay each year $600, as 
interest upon the money. He adds enough to 
the price of the implements, which he sells, and 
collecting the money from the purchasers, pays 
it over to the money loaner. The interest is not 
paid by him, but by the rent, wages, profit and 
interest in the goods. That is, interest comes 



INTEREST. I05 

out of the profit of all who consume, and these 
are necessarily mostly producers, from the 
margin to the highest point of production, or in 
other words, out of the average of capital in- 
crease. In this particular case, out of the profit 
of 2 per cent., comes interest of 6 per cent, and 
profit of 6 per cent. 

Thus, the first injustice, in any country where 
the supply of money is regulated so as to keep 
interest above the average increase of wealth, is 
that it gives to the holders of money, as a nat- 
ural sequence of law, the power to take out of 
production a larger share of the product than is 
made by the average of capital, and is a monop- 
oly to this extent. 

See again : In this same illustration, let the 
circumstances be changed, so as to reduce inter- 
est to 3 per cent., or about the average of profit, 
and what would be the result? The amount be- 
fore charged up, and collected as interest, would 
be divided by two and taken off from agricultur- 
al implements, and the price reduced accord- 
ingly, leaving this amount in the hands of the 
purchaser. Some other man with $10,000, see- 
ing our capitalist still making 6 per cent, upon 
his capital, will build another factory alongside 
of him, and make agricultural implements, the 



106 INTEREST. 

motive for storing money, being less than the 
motive for storing capital ; and both would, by 
competition, be compelled to approximate to 3 
per cent, profit ; and so would the miller up the 
valley, and the cotton mills just below, and the 
railroads, and all capital stored by money. This 
would again reduce prices to the farmer, the 
laborer, the wage-worker, and leave in his hands 
the profit, and interest, which, by unjust opera- 
tion of law, is taken away from them. It would 
further indefinitely increase the amount of capi- 
tal and demand for labor. 

The second injustice of interest above the 
average of production, is that it contracts the 
power of storing capital, and hence the power of 
labor to produce, creates a ruinous competition 
between laborers, and destroys all other health- 
ful competition. 

Take the same illustration again: The natural 
consequence of the increase of production by 
lowering interest to 3 per cent., under ordinary 
circumstances in society, would make a largely 
increased demand for money to transact ordinary 
business, and would lessen the amount for loan, 
and raise interest. The consequence would be, 
that as interest raised to 4 per cent., the capital- 
ist would be compelled to raise prices, or pay the 



INTEREST. I07 

4 per cent, of interest out of his 3 per cent, of 
profit. This would contract production, and 
capital would be turned into money, the motive 
being greater to store money than capital. The 
same thing is often done by the holders of 
money, it being a thing which does not waste or 
decay like capital, by making it artificially scarce, 
thus compelling men, who are in need, to pay 
higher rates than a just return for money. 

This is the third injustice of maintaining any 
system of money which keeps interest above the 
average of profit. It gives the power of expend- 
ing and contracting the profits of capital, the 
power which makes and breaks the whole com- 
munity. The increase of interest comes out of 
profit, and decreases the motive for storing capi- 
tal. 

Again take the same example: The $10,000 
thus loaned to store capital is not used in the 
sense of using wealth. It is simply parted with. 
In a week or a month it gets back into the bank, 
and is loaned again at 6 per cent, and again em- 
ploys men and stores capital, and again in a few 
weeks it is loaned to go through the same pro- 
cess. Loans and discounts show that all money 
is thus loaned, from two to three times, at an 



108 INTEREST. 

average of from two to three times the average 
increase of capital. 

This is the fourth arraignment which the law 
of justice and free competition brings against 
any law or system of laws, which renders money 
so scarce as to almost compel the geometrical 
increase of the non-producing factor of distribu- 
tion out of the slow and laborious accumulation 
of labor and capital. This condition is a neces- 
sary sequence of the nature and power of money, 
and is neither unjust or wrong, if the average of 
interest is made to conform to profit, as then the 
new capital stored by money, and which is really 
the representative of the credit given by money, 
would produce to the possessor sufficient to pay 
the interest, and society would not be injured. 

The normal condition of interest, under just 
government, is the average increase of wealth, 
as this is the average of profit which accrues 
from its use ; and any arrangement or want of 
arrangement by government, by which interest 
can be demanded for a greater amount than this, 
is a direct interference of the state to do an in- 
justice; is in contravention of the laws of com- 
petition and a direct violation of the principles 
of equity. Every atom of interest above this 
normal line is an inflation of interest by a con- 



INTEREST. IO9 

traction of credit, a gratuitous give-away by so- 
ciety — pure wind. 

Here, then, is the explanation of the term of 
inflation and contraction ; terms so commonly 
banded about in political writings, but never ex- 
plained. 

Any condition of money, which leaves the sur- 
plus of money for loan so scarce that a greater 
interest can be demanded for it than the average 
of the profits of capital, is contraction, and the 
reverse is inflation. The usual condition of all 
countries is contraction of the volume of money, 
This condition, as I have shown in three ways, 
tends at every stage above the normal condition 
of interest to stop or prevent the storing of capi- 
tal; to this extent destroys the power of pro- 
duction ; throws labor out of employment by 
placing the motive for storing the non-producing 
factor above the producing factor ; in short, it 
renders it impossible by operation of law, or 
want of law for any other condition to exist, than 
that in which just as much wealth shall be in the 
hands of the few as possible consistent with the 
balance continuing to produce. All the shallow 
pretense of political writers, that money is but a 
form of wealth, is thus shown in its cruel de- 
formity. 



110 WAGES. 



CHAPTER IV. 



Wages. 



The pay for human exertion — always forced to 
a minimum. The means by which this is 
accomplished — means by which it can be 
prevented. Natural wages are the whole 
product of labor, except enough to com- 
pensate for storing capital. 



Labor is about the only thing in society which 
is freely exercised under, and controlled by, the 
law of competition. Every laborer is liable to 
be a competitor with every other, and, for some 
unexplained reason, labor is always pressing on 
the market. Naked, man comes into the world. 
At maturity, unless by some good fortune he 
comes into the possession of the savings of 
others, he has but his own hands to depend 
upon to supply his wants. Idle lands he sees 



WAGES. I I I 

everywhere capable of supplying every neces- 
sity, but upon investigation he finds that with 
the best appliances and application, after sup- 
plying the wants and necessities of humanity, 
there is left but a little over 2 per cent, of the 
return upon the expenditure necessary to avail 
oneself of its natural powers. He must procure 
capital to make his labor available upon this 
land, or in any direction, and so he looks for it, 
and finds that after replacement and all incidents 
of capital, and making return to labor over and 
above the same, supplies a return of not much 
above 3 per cent. Should he go to some neigh- 
bor and propose to borrow a horse and plow and 
seed, or money to purchase the same, and offer 
to pay what capital produces, he will be told that 
money is close, is worth 6 per cent., 7 per cent, 
or 8 per cent., and it being pretty evident that 
he cannot pay 6 per cent, out of a gain of 3 per 
cent, he does not purchase, and the land lies 
idle, and another man jostles with his fellow 
laborers for a place to earn bread. This jostle 
for a place to earn bread has gone on since civili- 
zation commenced. Henry VIII. hung 70,000 
vagrants, men seeking to work for bread. The 
poor houses of all Europe are full of them. The 
most progressive and prosperous nation, so- 



112 WAGES. 

called civilized nations, have them; when not 
very plenty they are called loafers and vagrants ; 
when plenty, tramps. 

The political economists finds them, and be- 
comes so used to them that he comes to con- 
sider them a natural phenomenon — a necessary 
outgrowth of order of nature. Thus originates 
the theory of the " pressure of population" of 
Malthus, which, as it wained, was followed by 
that of Ricardo of necessary poverty. This 
theory, so highly endorsed by the eminent Mr. 
Mill, as that he calls it the " pons assinorum " of 
political economy, and recommends as the ultima 
thule of labor to restrict the production of chil- 
dren. Just as though children were not neces- 
sary to make men, and men necessary to labor, 
and labor necessary to produce capital and 
wealth, any one of whom can produce ten times 
as much as he consumes. The inventor of this 
remedy certainly ought to have a patent on it. 

Having kicked the props out from under this 
bridge, which was the seeming cause of all labor's 
woes, I may be pardoned if I totally repudiate 
all such theories, and replace them with one 
which conforms to the dictates of reason, and is 
the necessary outgrowth of the relation of wages 
to the other factors of distribution. It will not 



WAGES. I I 3 

be found to be a natural phenomenon, but the 
result of social adjustments; tl]e result of ignor- 
ance or design, which can under no circum- 
stances produce other consequences. 

The condition in which civilized society has 
always existed since the invention of money has 
been one of total ignorance of its relations and 
functions. Every conceivable form of money has 
been used and made, and are now made and 
used. Quantities of from $5 to $50 per capita, 
with interest from 3 per cent, to 50 per cent., 
have existed, and do now exist, with seeming, 
absolute disregard of its relations, or whether it 
has any relations to production. What should 
be money, character, quality, functions, quantity, 
etc., has been the grand guess of all ages. 

One class of society, without knowing or 
probably caring about ulterior consequences, 
have always had in view the fact that, if money 
was scarce, they could have high interest and 
live without labor upon the labor of others. 
Partially through such influences, but more es- 
pecially from the different views of supposed au- 
thority upon this subject, the volume of money 
has always been in a condition of contraction. 
That is, in all countries and at all times, it has 
been so scarce that the average interest has far 



114 WAGES. 

exceeded the average make of capital, out of 
which it has to be paid. This gives into the 
hands of the venders of money, as I have stated 
under the head of interest, to take all profit and 
rent and the large share of the wages of the 
great bulk of society. But this is not all. Capi- 
tal is stored by the slow accumulations of labor 
upon natural agents and products, and also by 
the use of money or credit, under certain con- 
ditions which I have explained. What interest 
takes as above is the slow accumulations of 
labor, leaving it without increase of capital to 
employ labor; but what is worse, it absolutely 
cuts off all motive to store capital to be used 
upon agents, which will produce less than profit 
equal to interest ; for if interest is so high that 
land or other opportunities will not pay net 
profit equal to interest, there would be no volun- 
tary demand to store capital to use such oppor- 
tunities, though the earth was teeming with food 
and clothing and comforts ready to be brought 
forth for man's use. And should it so occur 
that at or near the average of interest, on ac- 
count of the increased power of production, it 
were possible to supply all wants of society, leav- 
ing out a part of labor, such labor might go 



WAGES. I I 5 

starve or hang itself. It would have no other 
alternative. 

The manner in which contraction affects wages 
are: 

ist. It gives to interest and profit a larger 
share of the products of labor than would natur- 
ally go to them. 

2nd. It cuts off all voluntary storage of capi- 
tal, necessary to be used, to make land available 
below the margin of interest; thus throwing out 
labor from making capital for such purpose, and 
also from the use of opportunities upon poorer 
land. 

3rd. As a consequence it brings a large class 
of society always into idleness, who stand as 
competitors in the market with other laborers, 
and thus gives capital the power to coerce labor 
to any wages at which men will work. 

The most powerful motive which actuates men 
in society exists to so maintain interest, that the 
non-producing few, can absorb the products of 
labor and capital. This motive is to satisfy de- 
sire with the least exertion. It is most perfectly 
gained, if production can be controlled so as to 
produce idleness on the part of many, forcing 
labor lower and lower, enabling capital to make 



Il6 WAGES. 

larger and larger gains. Its only limit is the 
endurance of the producer. 

The condition in which the laborer is thus 
placed can be illustrated farther by examining 
the manner in which wages are taken. When I 
speak of wages I refer to all who work as wage 
workers, or as managers of capital in the pro- 
duction of wealth. 

" The real pay of the laborer is the product of 
labor," so says Adam Smith. Although this is 
usually paid in money, the money is but the 
representative of something which money dis- 
tributes, something which satisfies desire. The 
production of one man is the consumption of 
another. Real wages are, therefore, the product 
of his own labor. The price of all consumable 
commodities resolve themselves into R., W., 
P. and I. In any country where high interest 
and high profit prevail the relative proportion of 
I. and P. are high. When we recollect what 
Adam Smith says of profit and interest, how they 
are computed in all products, over and over 
again, it is safe to conclude in the United States 
that a fair estimate of the cost of supplies which 
labor gets for wages would be — 

Rent — 5,+ P. 15, + 1. 20 and wages 60=100. 

The laborer, when he gets his $2 for his day's 



WAGES. I 1 7 

labor and purchases flour, exchanges his $2 of 
labor for $1.20 of labor and 80 cents of (R,, I. 
and P.) There is no escape from this. The in- 
terest on $3,<x>o,ooo,ooo of railroad bonds, and 
profit on as much more stock, are figured into 
carrying rates and added to cost, and collected 
in every home from hovel to palace. Profit of 
all manufacturers, and the interest on borrowed 
money used by them, profits of all common car- 
riers and the interests they pay, discounts of 
all banks, in short, all profit, interest and 
rent, go into the price of coffee, sugar, cloth- 
ing and the like, and are collected almost 
wholly out of the vast many who labor for 
wages, or with their capital, at or near the 
margin. The law is as the law of the Medes 
and Persians, as inexorable as fate. 

This is not the natural condition of wages. 
The natural condition is one in which labor 
should receive the whole product of exer- 
tion, except sufficient to induce the storing of 
capital ; the small return necessary to induce 
labor to turn from one employment to another, 
or about the increase of wealth Should the sur- 
plus of money to loan be increased so as to re- 
duce interest and keep it there, the entire rela- 
tions of labor would then be natural. Interest 



Il8 WAGES. 

would exact no more than the amount produced 
by capital, out of which it was paid, and by it 
stored; profit by competition would drop to a 
level with interest, and the equation of wages 
would represent something as follows. 

R. 2,+I. 6,+P. 5,+W. 87,= ioo. 

The flour, which, at 6 per cent, interest cost 
$2, would, at 3 per cent, interest, cost $1.46, and 
wages would relatively be 30 per cent, higher. 

The reduction of interest, would further open 
up all opportunities for labor, make a motive at 
all times to store capital rather than remain idle, 
and all labor being employed would give a 
greater demand for products as fast as produced. 
Instead of labor pressing for a place to earn 
bread, capital would compete for labor, and thus 
again raise wages. Instead of the whole surplus 
product of labor being concentrated in the hands 
of a few, it would remain in the hands of those who 
produced it, augmenting the capital, which could 
employ labor, and production could go on until 
all desires became satisfied, and men would rest 
from groveling care, and be enabled to enjoy the 
higher walks of social and intellectual life. 



THE SOLUTION. II9 



CHAPTER V. 



The Solution. 



The foregoing explanation of the relation of the 
factor of distribution, to the factors of pro- 
duction, made to solve the various problems, 
which are vexing and threaten the destruc- 
tion of society, to wit : Panics, over-produc- 
tion, the tramp, the pauper and the million- 
aire. 



I have now examined and grouped all the 
factors which enter into production and distribu- 
tion. I have discovered their relation and effects 
upon each other, which result from social adjust- 
ment existing in society. I have shown what 
ought to be the result of their natural relations, 
existing freely under the law of competition and 
untrammelled by maladjustments of society. As 
all writers have heretofore constantly confounded 



120 THE SOLUTION. 

these relations, and rendered their conclusions 
unreliable of a necessity, so when given their 
proper places and relations, the conclusions 
drawn ought to bear the weight of mathematical 
certainty. Happily this proves itself to be a fact. 
Tested by these explanations, theory and fact 
for once agree; reason and political economy are 
in accord ; ambiguities and riddles, which have 
vexed the brightest minds, are made plain; 
doubts and uncertainties which have made vascil- 
lation and hesitancy a prominent feature in legis- 
lation vanish, and the way indicated by which 
government, with perfect freedom, based upon 
justice, can, and I believe, can only be maintained. 
The natural order in production is that land is 
worthless without labor. All objects which 
satisfy human desire are the fruit of labor. Capi- 
tal is essential to make labor available. The 
natural order in compensation, therefore, is labor, 
capital, land. When labor is exerted upon land 
freely, I have shown, after absolute necessities 
are supplied, i. e., when labor and capital are 
voluntarily exercised upon land, it arises from 
a motive, the motive of procuring the surplus or 
profit. That labor will be exerted in one or 
another direction, in proportion as the motive is 
greater in storing capital or in storing wealth 



THE SOLUTION. 121 

for destructive consumption. It is the natural 
outgrowth of the motive which controls all men, 
the tendency to satisfy their desires with the 
least amount of labor. And hence, so long as 
there is no stronger controlling motive, and this 
motive of ordinary profit exists, all necessary 
capital will be stored to employ all labor to the 
extent of all opportunities, natural or created — 
the limit being labor and opportunities, and the 
whole product going to labor, except the small 
portion necessary to divert labor from one em- 
ployment to another; and when land is appro- 
priated, wages of labor employed thereon, modi- 
fied by the almost imperceptible difference in 
natural powers of productiveness. 

This is the condition when money appears 
upon the scene Here comes an agent supplied 
by the state which produces nothing, but brings 
a return, which, without labor on its part, sup- 
plies all the necessities and desires of man, 
which never rests, rots or decays, which repre- 
sents all accumulations of wealth, all credits, and 
has the power to store wealth — more desirable 
than any form of wealth, because it commands 
all wealth and labor and opportunities, and can, 
therefore, always command the highest. 

The man who has capital must use it or it be- 



122 THE SOLUTION. 

comes worthless. Its employment requires hand 
and brain, brings chances of business, risk of loss 
by fire or flood, and is subject to constant waste 
and depletion. Money can wait. Without labor 
or chances, its possessor rests in ease, while 
the sweating, toiling millions wring from the 
bosom of unwilling nature his comfortable living. 

From the very nature and condition under 
which money originates, there has always been a 
chronic condition of contraction of the money of 
all countries Made of all kinds of material, 
supplemented by various devices, invented 
often under stress of necessity, its quantity has 
always been like the temperature varying as 
every wind set in the atmosphere of society. 
Through all these variations at no time has a 
money, which maintained its representative value, 
been made in such quantities as to conform to a 
just interest. Some nations have approximated 
to this, others have disregarded it altogether, 
and others have made it the subject of caprice 
altogether. The tendency of money is always, 
but especially in a progressive country, to con- 
traction. 

1st. Because the material out of which money 
has been freely made by nations is always limited. 
The metals, gold and silver, one or the other are 



THE SOLUTION 1 23 

and have been in all ages the only metals out of 
which money could be made at will, and never 
at any time have they been plenty enough to 
supply one-tenth of the actual needs of the 
money of the world, so as to reduce interest to 
an equality with the factors of production, and 
thus render justice between man and man. 

2nd. The very moment you get an established 
quantity of money in a country, and business ad- 
justed to this quantity, population and business 
must grow, if there is any room to grow. This 
creates a demand for money in the increase of 
the products to be exchanged, and the credit 
needed to store new capital. Now, no nation has 
ever provided, except France, I believe, at one 
time, anything to obviate this difficulty. Various 
devices have been created, intending to meet this 
difficulty, but they have all failed, such as our 
national banking system, the Bank of England, 
and the like, but they do not go far enough, and 
for the very good reason, which is also a reason 
for the contraction of the currency, viz.: 

3rd. Money is not a thing created by labor, 
or increased as you increase capital, or produced 
as you produce wheat or oats. Those who deal 
in money, and could increase the quantity and 
keep interest at 4, 5 or 6 per cent., are just as 



124 THE SOLUTION. 

well served, and a little better, if money is in de- 
mand at 7 or 8 per cent. They are compelled to 
do just one-half the business to make the same 
money, at 8 per cent, as at 4, and to leave the 
question of quantity in their hands, is the Fable 
of the Fox and Stork over again. This I say 
without any discourtesy to the profession. They 
are not compelled to pull the public chestnuts 
out of the fire, or to discommode themselves, to 
do a good turn to labor and capital, if labor and 
capital are so negligent of their own. 

4th. The direct action of classes of individu- 
als, who understand the effect of the increase of 
money, as seen in demonitizing one or the other 
metals, when it is likely to reduce interest. 
Various reasons are often given, but the true 
reason why superhuman exertion was made to 
demonitize silver lately, was because the quantity 
was liable to increase the power of labor and 
capital, by decreasing interest. 

5th. With all this the condition could not 
exist, for any length of time, were it not for the 
demoralization of public sentiment, occasioned 
by the erronious teachings of political economy. 
These teachings, as I have shown, based upon 
ambiguous foundations, leave upon the public 
mind an impression that the public has little in- 



THE SOLUTION. 125 

terest in the question of money. No knowledge 
has, therefore, been imparted, that the very life 
and existence of society depends upon money, 
and hence they allow it to be controlled by those 
whose interests are antagonistic, and whose 
bread is their blood. So that in all pretended 
civilizations, there is constituted by law this fac- 
tor of money, which brings in a new phaze in 
the field of distribution, and is the open sesame 
to the various conditions in society which we are 
discussing. 

I propose to examine and apply these princi- 
ples, in detail, to the conditions to be explained. 

BUSINESS DEPRESSIONS AND PANICS. 

All business depressions and panics are di- 
rectly accounted for by the varying conditions of 
money, and are especially noticeable in their ef- 
fects as resulting from the law of the supply of 
money, as governed and controlled in two dif- 
ferent modes. 

ist. Take a progressive country like the 
United States, and any period at which business 
has settled to the then present supply of money; 
new lands are constantly being opened up, re- 
quiring new capital ; factories must constantly go 
up to supply this capital ; new demand constantly 



126 THE SOLUTION. 

to store such capital ; private credit stretched to 
its utmost; public credit (money) not increasing 
in proportion, interest goes up; business which 
at 5 per cent, was profitable, at 6 becomes less so ; 
business which was being done nearer the 
margin becomes profitless ; all business on capital 
stored at 3 per cent, or 4 per cent., at 6 or 7 per 
cent, becomes valueless, as all profit goes to in- 
terest ; production ceases at the extremities, be- 
cause high profit and high interest carry con- 
sumable products higher and higher in price; 
demand ceases ; railroad traffic falls off; failures 
are recorded by the dozen; mills shut down; 
stagnation everywhere; men idle; money so 
scarce at business centres that from 10 to 20 per 
cent, a day is demanded for its use ; banks cease 
to loan, proceed to call in discounts ; money con- 
gests in the centres; reserves of banks get 
plethoric; after awhile interest drops a little; 
mills start; labor goes to work, and goes through 
the same round over and over again. 

The second mode, is when the contraction of 
credit is not relative, but the direct action of 
government in contracting the money of the 
country, or where it is done by the exportation 
of the money, resulting in a like contraction. It 
occurs in all countries, but especially in one 



THE SOLUTION. \2*J 

which depends entirely upon an exportable com- 
modity, like gold or silver, for its money volume. 
It was the direct cause of the periodic panics, 
which came and went as the tide, bringing dev- 
astation and destruction in their wake, prior to 
the present system of money, based, in part, 
upon the wealth and labor of the country. Gold 
and silver were then the basis of money, and 
private credit based upon these, and redeemable, 
or supposed to be so, in this kind of money. 
This credit, issued without any reference to the 
demand of business, solely to the end of private 
gain, soon set the wheels of commerce and manu- 
facture in motion, and the best lands which could 
afford to store capital, at the highest rate of in- 
terest, were occupied. Production carried on at 
such disadvantage, gave it into the hands of any 
nation v/ho so arranged interest, as to carry on 
production, at a low rate, to undersell all articles 
of manufacture, into which profit and interest 
largely enter as an ingredient of price, and thus 
carry away the gold and silver in exchange for 
their cheaper products. Money thus became 
scarcer and scarcer ; private credit greater and 
greater ; interest draughts greater and greater, 
and when the time came that payments must be 



128 THE SOLUTION. 

made, this private credit, based upon nothing, 
collapsed. 

The history of all panics and business depres- 
sions of all countries will show that contraction, 
relative or actual, has caused every such panic 
in the history of civilization ; that on their recur- 
rence again and again, some new scheme of wild- 
cat money has always been patched up to ruin 
the next generation. Common sense shows any- 
one, that had money been kept at an interest, at 
or near the average increase of wealth, there 
could be no panic, because there could be no 
general failure to meet obligations, the wealth re- 
alized from capital stored on the average, meet- 
ing all obligations. 

And so the mystery, which hangs around the 
words 

OVER PRODUCTION. 

fades away as the light of these truths is turned 
upon it. Whenever, in the course of events, it 
so happens that by the increase of productive 
power, from the increase of mechanical appli- 
ances, three-fourths of any people are able to 
produce for the whole, and interest is maintained 
so high that the greater proportion of production 
using capital voluntarily stored by money, i. e. 



THE SOLUTION. I 29 

for profit, is carried on above the average increase 
of wealth, the remaining one-fourth may stand 
still, though opportunities below this average of 
interest may be as thick as huckleberries. The 
graneries and warehouses of those producing 
will be crowded with goods and merchandise, 
simply because by this abnormal condition the 
balance of society is barred from using its labor, 
and of course has nothing, or comparatively 
nothing, to exhange for products, which are 
everywhere wanting a market. This is over 
production. When interest is so high as to 
necessitate capital being used only in connection 
with high opportunities, barring out the storing, 
or using capital in less productive fields, and yet 
producing enough for all, and this is the exact 
commenqement and birth of that condition of 

EXTREME POVERTY: THE ORIGIN OF THE TRAMP. 

Under the foregoing circumstances, suppose a 
man has land which will produce, say 3 per cent, 
net, and has no capital ; to use his labor he must 
buy capital on credit, or borrow money and buy. 
He produces 3 per cent, and pays 6 per cent, in- 
terest, or in other words, he just makes wages. 
Now interest rises to 7 per cent. ; he must take 
out of his wages the 1 per cent, to pay this extra 



I3O THE SOLUTION. 

to interest. One bad harvest and he is a beggar. 
And what of him who has not land or capital 
when such a time arrives. Strong, vigorous, 
capable, he stands in society an absolutely use- 
less thing; his labor not needed by others; op- 
portunities to make wages all around him, but 
the means to use these opportunities held above 
the possibility of his ever making return. He is 
just as absolutely barred out of production, by 
the Torce of these artificial circumstances, as if 
he was an absolutely naked man, standing on a 
barren rock in mid-ocean. He has only one ad- 
vantage, he can beg or steal. He sees around 
him plenty, just beyond his reach; he hears the 
laughter and mirth, and sees the sunlight which 
brings joy to the bedecked hills, none of which 
ever crosses the threshold of his soul ; out of place 
in the world, an Ishmaelite — hope dies, brood- 
ing discontent and hatred takes possession — he 
is fermenting the blood of revolution. And so 
as natural as day succeeds day we find the vast 
majority of the wealth in the hands of the few. 

The contraction of credit contracts the power 
of production, and creates a relation between dif- 
ferent parts of production, that the return to all 
capital stored at the ordinary rate of 2 and 3 per 
cent, is absorbed by the profit of capital, and 



THE SOLUTION. I3I 

money used at the top of production ; or, in other 
words, the quantity of money, like the balance 
of a steam engine, makes use of all the higher 
opportunities of production to draw to itself the 
whole product of the community. Not simply 
by drawing the extra percentage over ordinary 
profit, but by actually curtailing production so 
that a few can absorb the wealth and wages of 
all. If one-sixth of the production of any coun- 
try was done on interest of 6 per cent., and the 
average profit was i per cent., the whole of the 
surplus or profit would be in the hands of one- 
sixth. They would produce nothing, but absorb 
all. 

Although the wisdom or the selfishness or the 
ignorance of man has never shown what might 
be the result, was the law of justice established 
in regard to money, and its interest reduced and 
kept at a rate which corresponds with the amount 
of its advantage to society, yet we have oc- 
casional glimpses in history, when, as it were, 
the vail was lifted, and we were permitted to 
look into the vestibule of that glorious con- 
dition in the world when production should be 
untrammeled by such injustice. There have 
been some cases in history which show and 
demonstrate the capacity of humanity to pro- 



132 THE SOLUTION. 

duce. Occasionally a political economist, in a 
state of partial sanity on this subject, will give 
testimony. Such is the case with Adam Smith, 
"Wealth of Nations," book No. 2, chapter iv. 

Here for once he keeps money and capital 
separate, profit and interest separate as they 
should be, and see how straight a story he tells : 

" As the stock to be lent at interest increases the in- 
terest, or the price which must be paid for the use of that 
stock, necessarily diminishes, not only from those gen- 
eral causes which make the market price of things com- 
monly diminished as their quantity increases, but from 
other causes which are peculiar to this particular case. 
As capitals increase in any country the profits which can 
be made by employing them necessarily diminish. It 
becomes gradually more and more difficult to find within 
the country a profitable method of employing any new 
capital. There arises in consequence a competition be- 
tween different capitals, the owners of the one endeavor- 
ing to get possession of that employment which is occu- 
pied by another. But upon most occasions he can hope 
to jostle that other out of this employment by no other 
means, but by dealing upon more reasonable terms. He 
must not only sell what he deals in somewhat cheaper, 
but in order to get it to sell, he must sometimes too, buy 
it dearer. The demand for productive labor by the in- 
crease of the funds which are destined for maintaining it 
grows every day greater and greater. Laborers easily 
find employment, but the owners of capital find it diffi- 
cult to get laborers to employ. Then competition raises 
wages of labor and sinks the profit of stock." 

There you have it, when the great teacher 



THE SOLUTION. 1 33 

speaks without ambiguity of confounding money 
with capital or interest with profit. And the 
story runs, as money increases interest decreases, 
profit falls, prices fall; not rise (as Mr. Mill 
says); wages rise, or, in other words, the tendency 
of production is back to the normal condition, 
in which labor gets all the product except the 
minimum which would restore capital. 

In this direction is the testimony of Mr. Hume, 
the eminent historian, who, after exhaustive re- 
view of society, sums up thus : 

1 ' Accordingly we find that in every kingdom into 
which money begins to flow in greater abundance than 
formerly, everything takes on a new face, labor and in- 
dustry gain new life, the merchant becomes more enter- 
prising, the manufacturer more diligent and skillful, and 
even the farmer follows his plow with more alacrity and 
attention. * * * 

' ' The good policy of the government consists only in 
keeping if possible, still increasing, because by that 
means it keeps alive the spirit of industry in the nation 
and increases the stock of labor, in which consists all 
real power and riches." 

These sentiments are the burden of scientific 
writings upon this subject, which I need not 
quote. 

Mr. Mill tells us that with the increase of 
capital production could go on indefinitely until 
all labor was employed. The limit of the quan- 



134 THE SOLUTION. 

tity of capital in any country can never be 
reached until you reach the limit of labor so long 
as interest is maintained below the average in- 
crease of wealth. 

In concluding this part of the subject I desire 
to say that the scientific conclusions here de- 
duced are in strict conformity to actual facts in 
the experience of business men. 

Go into any community and inquire for the 
person who is reputed the man of wealth, and 
you will find that the man who commenced 
early, and continued to loan money, has pros- 
pered as well as the best. 

Millionaires are not found among the pro- 
ducers of raw products, in which are mostly 
labor. They are found among manufacturers, 
middlemen, bankers ; men who have not created 
the wealth they possess, but have, through the 
power of interest and profit, at the top of pro- 
duction, absorbed the makings of many thous- 
and of their fellows. The lever which has lifted 
them to the heights, has on the other end the 
tens of thousands who have gone down to hard, 
half-requited toil, and many to misery and suffer- 
ing. It is not a thing which is hidden any 
longer or a mystery. It is the natural outgrowth 



THE SOLUTION. I35 

of injustice which can be written upon the tombs 
of nations. 

"Interest above the average increase of wealth 
is a certain destruction of equality and of free- 
dom." 

"Governments are based upon justice or bay- 
onets." 

"Law in accordance with justice or a govern- 
ment of force." 



I36 OTHER REMEDIES. 



BOOK III. 



The Remedy. 



CHAPTER I. 



An analysis of other proposed remedies, show- 
ing that no one of them will correct existing 
evils, or meet the requirements of justice. 



Having now made plain the cause of the per- 
sistence of poverty amidst a superabundance of 
production and ever increasing power of produc- 
tion, it will be advisable to examine the various 
remedies which have been suggested to ascer- 
tain if any one is adequate to correct the diffi- 
culty, and if not, wherein the failure is made ap- 
parent. 

The first which naturally suggests itself is that 
which is first in the order of society, has existed 



CO-OPERATION. 1 37 

since the commencement of civilization, and in 
early society was a bar to unequal conditions. 
It is called 

CO-OPERATION, 

and means an organization inside of advanced 
civilization, in which the members labor for the 
common good of each other, with common capi- 
tal and division of results, whether profit or loss. 
The history of such organizations may be written 
in a few words. If they employ themselves in 
the production of raw products, and make their 
surplus exchanges with the outside world for 
products, which contains a large amount of 
profit and interest as an element of price, the so- 
ciety will live at the margin of cultivation, or at 
or near the verge of poverty; no absolute desti- 
tution, but scarcely any comforts, luxuries or ac- 
cumulations. If they combine more and more 
of manufacturing and other industries, in which 
interest is added to cost, they will thrive, in- 
crease and live luxuriously if they choose. If 
they combine the element which makes the 
greatest draught upon society, issue their own 
money, add to their exchanges interest and 
profit, which costs nothing to get, they will be- 
come rich, powerful and prosperous. The great 
co-operative societies of England, especially those 



I38 CO-OPERATION. 

of Rochedale and London, the co-operative 
building associations of Pennsylvania, and, in 
fact, all such organizations which succeed, are 
those which pay no interest and profit, which is 
not compensated by interest and profit drawn 
from without. Such societies cannot help suc- 
ceeding under fair management, as their very 
constitution secures a just division of proceeds, 
and the average of production of all countries is 
not only enough to insure comfort and plenty, 
but is always increasing. These statements show 
that the conditions are always limited in which 
co-operative organizations can be maintained. 
They must embrace a large range of production, 
so as to embrace an average range of productive 
employment, or, if small, a productive employ- 
ment up to this average. Thus, if a community 
of farmers should co-operate and have no ad- 
vantage of manufacturing, the small average 
profit of those who were successful would be di- 
vided with those who might fail, but they would 
exchange their product, which contained mostly 
labor, with the manufacturer, whose goods are 
burdened with high interest and profit, and no 
benefit would accrue. Their labor would go 
where it now goes, in exchange partly for the 
labor of others, partly for legitimate profit, and a 



SOCIALISM I39 

large share of it for wind. All profit above the 
average of production is something taken for 
nothing — a pure give-away by society, wind; so 
that co-operation can do no good only in limited 
areas, where they make the very few on the in- 
side, on the average better off, but always at the 
expense of the outside, if any more successful 
than they. But I hear some one asking, then, 
why not 

SOCIALISM, 

an enlarged co-operation, in which all society is 
a stockholder; or, in other words, a government 
which organizes society so that the whole pro- 
duction shall be shared by all alike. Of this 
class are the systems advocated by Fourier and 
St. Simons. They are the opposite of individual 
freedom. In essence, they hold that individual 
powers and capacities should be held in obeyance 
to the common good. Carried out to its ulti- 
mate, it would hold, that individuals in society 
are responsible for the heredity, for the errors 
and deficiencies of the ancestry of other men. 
Co-operation is a voluntary act. Socialism, be- 
ing designed to be universal, could not be vol- 
untarily brought about so long as such ideas 
were repugnant, or rather, until men became ut- 



I4O SOCIALISM. 

terly unselfish. If attained, therefore, it would 
be by coertion, and when so attained would 
destroy all motive for exertion, as the reward of 
such exertion would be merged in the public 
good. The natural tendency would be toward 
indolence and inertia, and the injustice would 
always face society, of compelling those who 
wrought, to be burdened with the lives of the 
thriftless and careless, and of placing those who 
were capable and successful, on a par with those 
who were dwarfs in physical and intellectual 
power. 

Beside this, to be successful, socialism must 
embrace the whole earth, or that nation which 
adopts its teachings must remember to make ar- 
rangements, to so regulate its money, as to make 
interest on a par with the other nations of the 
earth, else those outside nations underselling its 
manufacturies would break them down, and then 
by high profit and interest upon loaned credit, 
carry away the products of their labor, and 
leave them penniless, or compel them to equal- 
ize profit with industry, by prohibiting free inter- 
course. 

The most advanced and philosophic minds see 
no hope for socialism (if there is any real desire), 
until men become utterly unselfish, and then of 



LABOR ORGANIZATIONS I4I 

a necessity no motive for it, or for government, 
for that matter, for men could not suffer so long 
as there was no motive to accumulate, as produc- 
tion would continue up to the supply of all nec- 
essities. 

LABOR ORGANIZATIONS. 

The effect of labor organizations, has, as a 
usual thing, resulted in little good to those en- 
gaged in them. The trouble with the pay of 
labor lays deeper down than the will or wish of 
most employers. They are men like other men, 
some of them with plenty of wolf in their com- 
position, others with plenty of the milk of human 
kindness. Thousands of employers would pay 
better wages if they could. The draught of in- 
terest already alluded to, railroad discriminating 
rates, profit and taxes, render it impossible to 
pay greater wages and survive. When they 
could, but will not pay greater wages, labor or- 
ganizations seldom accomplish anything by try- 
ing to command wages, because, as I have shown, 
and for the reason I have shown, there always 
stands ready a large class of laborers to take 
their vacant places, who have been, and always 
are, pinched out by high interest and high profit, 
so that no matter how unjust or oppressive 



142 LABOR ORGANIZATIONS. 

wages may have been, on the whole, the resort 
to strikes has not been a paying business ; com- 
puting time lost, extra expense of idleness, and 
demoralization of the laborer, the extra pay 
gained, seldom overcomes the loss in securing 
the gain. 

A curious fact connected with many strikes 
which are constantly taking place, is the evident 
want of information, respecting the real condi- 
tion of production. Any person who will take 
the trouble to examine table viii. of the appen- 
dix to this work, will find that the total produc- 
tion of the United States for 1880, was $8,532,- 
386,251; that this had to pay all waste, taxes, 
interest, profit, rent and wages. From division 
"A" of that table, I have taken out the neces 1 
sary charges for these expenses in society. I 
have then taken out the amount of the pay of 
women, children and old men, and divided the 
balance between the 12,986,111 men and youths 
from 16 to 60 years of age, which the census 
shows were engaged in labor and in the profes- 
sions, and it gives $417.28 of the actual produc- 
tion to each man per year, or $1.39 for each man 
per day, if equally distributed. I have again di- 
vided this total production between the 10,539,- 
149 wage- workers, on the theory that they sup- 



LABOR ORGANIZATIONS. I43 

port the professional classes, and it gives to each 
$523.76 per year, or $1.74^ per day of a year 
of 300 days. Understand, this is on the basis of 
present interest, and without any profit going to 
capital. What it would be with lower interest is 
another thing. But as long as the laborer works, 
and votes for the present interest on money, he 
is barking up the wrong tree when he strikes, 
and has a salary of $1.74^ a day. 

As long as he continues to exercise the real 
power, and means to procure a just return and 
just relations in society, i. e ; the elective franchise, 
as he now does, and yet wants to compel an em- 
ployer, to divide the results of his high profit 
with him, he stands in the relation of a co-conspir- 
ator with the very men who now destroy all the 
real interest of both labor and capital. 

I have shown as above, that all labor earns 
only this small pittance. I have shown that the 
reason is because labor is pinched out from work 
and made to stand idle, producing nothing. I 
I have shown that this is done through law, and 
on purpose to accomplish this very end. 

I have shown that as interest ascends, profit 
must go down, or it must come out of wages. 
That as interest goes up, it is and becomes more 



144 LABOR ORGANIZATIONS. 

profitable to stop work and throw men out, than 
to keep them at work. 

In any country, therefore, where men have the 
elective franchise and go steadily forward voting 
for men so ignorant of these truths, or whose 
whole interest is in destroying production and 
forcing wages to a minimum, and then strike for 
more wages than their share of the whole pro- 
duction, what better are they than the monopo- 
lists or the railroad wrecker. Are they not con- 
spiring to produce a condition in which the em- 
ployer can exact a large amount of profit out of 
the loss of fellow-labors, needle women, miners, 
farm laborers, factory girls, and then want to 
force a part of this public plunder, out of the em- 
ployer, or, in other words, divide the swag ? I 
say in all candor to laboring men their responsi- 
bility does not end when they have turned off the 
steam, or shut down the lathes ; nor in the lodge 
when they have paid their dues ; they ought to 
come up higher ; to get nobler and broader 
views than those of individual wages. The place 
to strike is at the ballot box. Every ballot cast 
to perpetuate the system which now destroys the 
interest of labor and capital alike, is wet with 
tears of sorrow, which ought to scald and wither 
the heart of the man who knowingly casts it. 



LABOR ORGANIZATIONS. 145 

Two or three things labor organizations can 
do: 

1st. They can, by a proper system of intelli- 
gence offices* bring employer and employed to- 
gether so as to promote the interest of both. 

2d. By discussion and interchange of ideas, 
they can gain larger knowledge of the causes 
which lead to the depression of wages, and thus 
prepare themselves to make an intelligent de- 
mand of legislators for such laws as shall pre- 
vent any individual, or class of individuals, from 
becoming the sole owners of the product of la- 
bor and the life and destinies of the laborer, and 
if one legislature will not heed this demand, so 
unite the power of labor at the ballot box as to 
control legislation in the interests of justice. 

3d. Until such time as public sentiment is 
brought to fully understand the power and influ- 
ence of scarce money and high interest, to drive 
labor from the field of production, such organi- 
zations might, by laying by small sums of money 
from the wages of its members, soon build estab- 
lishments where labor combined with profit, and 
interest, would afford a reservoir into which 
idle labor could flow, until public sentiment 
could be aroused to strike down the means by 
which labor is now forced to a minimum. 



I46 ISSUE OF PAPER MONEY. 

ISSUE OF PAPER MONEY OR GREENBACKISM. 

The leaders and promulgators of this theory 
teach that the way to remedy existing evils is to 
issue paper money. The foremost teachers and 
thinkers among this class, assert that as the 
money increases, the price of production in- 
creases, and the wages of labor in just the same 
proportion. That if money were doubled, wages 
would be doubled, and the price of products 
doubled. Now, as Adam Smith says, "the 
wages of labor are the products of labor." The 
logical outcome of this theory is, that the labor- 
er is just as well off in one condition as in the 
other, for if this theory be true, when wages are 
$1.00 per day, and flour $1.00 per sack, when his 
wages rose with the increase of money to $2.00 
per day flour would be $2.00 per sack. As the 
lobor scarcely ever has a surplus, what avail 
to him is such a condition ? The real per- 
son under this theory who would be affect- 
ed, would be the creditor. His credits hav- 
ing been made under a system of less money 
and for products as then valued, would be 
worth just one-half as much as before; that 
is to say, they would command just one-half the 
products of labor. In short, the theory of the 



NATIONALIZATION OF LAND. 1 47 

Greenbacker, as thought by the Greenbacker, is 
a cute device to repudiate about one-half of the 
value of all debt, contracted prior to his adop- 
tion. Of course it is not pretended by any one 
of this class that the issuance of a few or many 
greenbacks will have any effect upon the price of 
gold, or foreign exchange, or that the issuing of 
greenbacks increases or decreases the sum of 
wealth, by which wealth should be of less or 
more price. The effect of the increase of money, 
as we have seen, is to decrease interest, not in- 
crease price. Possibly they get their theories 
from some of the vagaries of Mr. Mill. The 
least that can be said of them is, if they want to 
issue a money which will buy but one-half the 
product, or, in other words, a depreciated cur- 
rency, they commit as great a crime as the man 
who advocates the contraction of the currency. 
The monometalist wants all the surplus of 
wealth by his dishonest trick, the Greenbacker 
wants to repudiate one-half of all obligations by 
his dishonest trick; that is, taking him accord- 
ing to his own teachings. 

NATIONALIZATION OF LAND. 

Having had occasion to note the entire fallacy 
of the theory of Ricardo's law of distribution, 



I48 NATIONALIZATION OF LAND. 

and its modern renovation by Mr. George, it 
might seem superfluous to refer to the remedy 
proposed by him. I deem it profitable to do so, 
as I can do no better service than to uproot the 
subtle fallacy, into which he is led by his idolatry 
of his interpretation of the law of Ricardo. I 
am also led to do this, because, while his theory 
of the cause of poverty is erroneous, his remedy 
might serve a good purpose. His remedy, I 
fear, will be found no better than his theory. As 
before stated, his remedy is a tax upon land, suf- 
ficient to confiscate its rental value to the State, 
in lieu of all other taxes. The reader will bear 
in mind that Mr. George makes no distinction 
as to values of land, whether speculative or 
otherwise. He calls them all rent values. 

I never found any statement by Mr. George, 
as to what the amount of the tax would be, or 
how it is to be determined what tax will take the 
value of the land. If we go to political economy, 
we find it stated there that interest on money de- 
termines the value of land. The present tax, 
which equals the value of land, is, therefore, the 
money interest on its value. In England it would 
be from 3 to 4 per cent. ; in the State of New 
York it would be from 5 to 6 per cent.; in 
Kansas 10 per cent; in Colorado 15 to 20 per 



NATIONALIZATION OF LAND. 1 49 

cent.; in China 20 to 30 per cent, and in India 
30 to 50 per cent. 

Mr. George carefully states that this tax is to 
be levied upon land values only, excluding all 
improvements. Take this as a basis in the 
United States, and what would be the result? 
The total assessed value of agricultural lands is 
about ten billions, say three billions is improve- 
ments (a small estimate), and this leaves seven 
billions to tax. This at 6 per cent, would pro- 
duce $420,000,000; at 7 per cent. #490,000,000 
of tax; at 8 per cent. $560,000,000. Now the 
total tax of the United States in 1880 was a lit- 
tle over $700,000,000. Mr. George would add 
the value of the land in the cities and towns 
upon which are business blocks, and would, ex- 
clusive of buildings, get possibly two billions 
more to tax, which, at 8 per cent., would produce 
just about enough to run the government, Na- 
tional, State, and town and county, as they are 
now run. It is therefore a grave doubt whether 
there would be provided under this theory, enough 
money to pay ordinary public expenses as they 
now exist, even if all real estate and land values 
were taxed at average interest on money. 

Even though there should thus result suf- 
ficient to meet public expenses, what would 



150 NATIONALIZATION OF LAND. 

there have been accomplished ? This tax would 
destroy all speculative rent, or, to follow his 
theory, you must still raise the tax until it does 
take away the value of the land. If 8 per cent, 
will not do this, then it must be raised to 10 per 
cent, or 20 per cent, or even to 50 per cent. 
This is the essence of the whole theory — to de- 
stroy all motive for investing in land. A tax 
which will do this, and at the same time cover 
all expenses of government, is the only tax 
which will answer the ends of his theory. 

The first effect would be to put back in the 
public domain all land not cultivated or used. 
No taxes would thereafter, come from such land. 
This would compel another increase of tax upon 
the land which continued in use. 

2nd. No person could occupy this public do- 
main without paying full interest upon the as- 
sessed value thereof. 

3rd. No person would voluntarily occupy any 
land, unless he could make this tax and profit 
upon his own capital equal to interest. 

4th. The very few who could do this, to-wit: 
a small class of middle men, transporters and 
manufacturers would charge this, as they now 
do, as expense upon price of goods, and collect 
it out of the vast majority of society who work 



NATIONALIZATION OF LAND. I 5 I 

for wages, or work on land with their capital at 
the margin, or pinch it directly out of wages on 
account of enforced idleness caused by high in- 
terest. 

5th. The man without capital would not be 
able to go on to the public domain, having 
nothing to cultivate with or secure rent. I there- 
fore conclude that the poor man is better off 
now than he could be then, for if he had capital 
to secure rent, he would now have capital to buy 
the same land, or at least to secure its purchase 
money. By saving a little for a few years, he 
could pay back the loan, and own the land for- 
ever free from rent. Under Mr. George's sys- 
tem, when he became old and decrepit and un- 
able to pay the rent, the tax gatherer would 
evict him, confiscate his labor in the land, and 
leave him a beggar by the wayside. A poor man 
can go anywhere in the United States, and I 
think almost any place on earth, except, per- 
haps, in some portions of Ireland, and do better 
than to adopt Mr. George's theory. He can rent 
lands already improved and in cultivation for less 
than the money interest upon assessed value of 
land and improvement. This plan would defeat 
the very object for which it was intended. It 
shuts the poor man out from the land, and places 



152 NATIONALIZATION OF LAND. 

the burden of society upon those least able to 
bear the burden of taxation. 

The inherent and subtle fallacy of this theory, 
and that which gives it a show of plausibility, is 
that it constantly confounds land values, with 
rent values. Taking rent by taxation is appro- 
priating natural opportunities. Taking the in- 
crease caused by the growth of society is taking 
what is styled the " unearned increment" given 
to the individual by the labor of others. But as 
I have shown no rent accrues in the increased 
price of capitalized land (land used exclusively to 
place and employ capital upon), and hence a tax 
upon this value is not the appropriation of rent, 
but an appropriation of a part of the increment 
of money and capital. This increment (profit 
and interest) is just as much an " unearned in- 
crement" as rent, and originates wholly from 
the increase of society. Now, Mr. George 
proposes to continue in full force the present 
system, by which, I have shown, the whole in- 
crease of society as a sequence of law is ab- 
sorbed by a few and tax out of them a small 
portion of this " unearned increment," viz.: The 
proportion invested in land, to the whole value of 
the total investment — land and capital erected 
and operated thereon. Now, whatever may be 



NATIONALIZATION OF LAND. I 53 

said of the propriety of absorbing this increment 
of money and capital, the monstrous injustice and 
folly of this mode of attempting to acomplish 
this object is apparent. Nowhere is there any 
uniformity of relation of land to the capital 
erected or operated thereon. Upon land side by 
side, of the same value may be capital of ten or 
twenty times the amount respectively; the one 
absorbing of this "unearned increment" ten or 
one hundred fold, while the tax would be exactly 
equal. The tax of the one would be ten or an 
hundred times greater than the other relatively. 
If this increase is the property of society and is 
to be confiscated by society, justice demands it 
should all be taken, or taken proportionately. 

But this is not the worst feature of the case. 
Such a tax would not fall upon this land or capital 
or money at all. It would be charged upon the 
products of the manufacturer, placed upon the 
price of goods of the middleman, added to dis- 
counts, taken out of the tenant, and passed over 
upon the laborer and producer at the margin just 
as it now is. 

So long as society regulates its money so that 
the necessities of the bulk of producers makes 
them constantly compete for credit, money and 
voluntarily stored capital will shirk all the 



154 NATIONALIZATION OF LAND. 

burdens of taxation. They will coerce out of 
production whatever they pay by adding to 
profit and interest. 

When Mr. George thus substitutes profit and 
interest for rent (probably by mistake), he not 
only abandons the whole theory upon which his 
explanation of poverty rests, but actually pro- 
poses a remedy which perpetuates the present 
iniquitious system of distribution, and which, in 
results, can do nothing but aggravate and inten- 
sify the evil consequences which flow there- 
from. 

It is objectionable on other grounds ; all strong, 
just and progressive governments are based upon 
the independence and manhood of its members. 
No manhood or independence can be maintained 
unless man are rooted to the soil. The reliance 
for a home, or a livelihood, upon the change of 
government officials, change in the judgments of 
men, the growth of society, the increase of ap- 
praisements without the increase of producing 
capacity, change of seasons, of sickness and mis- 
fortune, which would make a home a football of 
circumstances, would destroy all independence 
or motive of independence. Land sufficient to 
the support of parents, and offspring to maturity, 
safe against all claims except the support of the 



NATIONALIZATION OF LAND. I 55 

state, is the sure basis of independent acting and 
voting. 

So again this system would produce a sur- 
face, straggling, exhaustive culture Under such 
circumstances the capitalist would use his re- 
sources to exhaust the land, and make all the 
present return, with a view of letting it go back 
to the state. One would scarcely plant a vine- 
yard, or build a permanent house, when he knew 
that he or his own, might not possess them. 
Would any one voluntarily build houses or busi- 
ness blocks upon land where the rent was liable 
to double or treble as the years slipped by? 
Men do this on leases or on perpetual rent, but 
men are apt to run shy of rack-rent, even if 
levied for the benevolent purpose of saving a 
large class of citizens from taxes more equitable 
than their own. 

But the system is unjust as well as impracti- 
cable. All the agricultural land upon the face 
of the globe, which have been used for one hun- 
dred years (and I think for fifty), has, at the 
average rate of interest, been paid for to society 
from one to twenty times the value of its present 
appraisement. Take a piece of land open to 
entry in Kansas thirty years ago. The pur- 
chaser then surrendered to the state #1.25 per 



156 NATIONALIZATION OF LAND. 

acre or $200 per quarter section. He has since 
paid taxes on this land at an average valuation 
of $600 per quarter at least, and at the rate of 1 
per cent, taxes. One per cent, on $600 is 3 per 
cent, on $200. The average of interest has been 
at least 10 per cent, per annum. So he has paid 
at the rate of 13 per cent, on $200 for thirty- 
years. Money at 13 per cent, doubles in five 
and one-half years compounded. So the land 
cost, or the state or society has received for the 
surrender of its right to this land in 1861, $400; 
1867, $800; 1873,^1600; in 1878,^3,200; 1885, 
$6,400, and in 1889 it will amount to $12,800. 
There are very few quarter sections of land in 
the state of half this value. The Island of Man- 
hattan, on which is built the city of New York, 
cost in 1 62 1 the sum of $25, which at compound 
interest exceeds all the present value of the 
land, all it ever produced and all improvements 
upon the island to-day, estimated at from one to 
two billions of dollars. It is no answer that 
society has not had this value out of this par- 
ticular land. That is not the lookout of the 
purchaser. The state has had this money, and 
could by loaning it have had the accumulation 
by waiting and receiving the interest. The in- 
indestructible and original powers of the land 



NATIONALIZATION OF LAND. 1 57 

were exchanged for a power to gather more 
wealth than the net return from the land; so- 
ciety has had it; if society had paid it out for 
guns and wars and other needs, so much the 
worse for society. It has parted with its right 
to the land for an equivalent and more than a 
just compensation, and the power does not exist 
in society to annul its own contracts or confis- 
cate the land, so long as the balance of com- 
munity are deprived of no rights thereby. 

At the risk of repeating, I must beg every one 
to bear in mind, what most writers constantly for- 
get, and Mr. George occasionally with the rest, 
that rent is not what is paid for, or does it arise 
out of the improvement upon land. The price 
paid for a dwelling house, the use of a store 
house, are not rent ; they are payment for capi- 
tal. The payment for an improved farm in part, 
a small part, for rent, and a large part for the 
use of improvements (capital). This total payment 
is so high, because cost of capital is so high, and 
capital commands so much, because it can be 
turned into money, and produce interest, or, if 
stored with loaned money, it must bring interest 
or lose. Labor pinched out, comes in constant 
competition with labor, and wages fall, and hence 
land rises. How would a man demand rent, if 



I58 NATIONALIZATION OF LAND. 

labor commanded all the product, except the 
small portion which would store capital ? The 
owner would be out the use of his land, improve- 
ments, taxes, and wear and tear. The value of 
land depends upon how cheap labor is, not labor 
upon the price of land. Land is valueless with- 
out labor. Reduce transportation to a minimum, 
profit to 3 per cent., and interest likewise, and 
you would at once reduce rental profits in New 
York City. Railroads would be built out, and 
cars running every three minutes to towns scat- 
tered all about the city, with nominal fare, where 
would be cheap dwellings to hire, because capi- 
tal would be cheap, and cost for use propor- 
tioned. Hundreds of millions of dollars which 
are now exacted for the use of wind, would stay 
in Western and Southern States. Shoe factories, 
woolen factories, cotten factories, would be built 
there which are pinched out now by high inter- 
est. The relative productiveness of land would 
become equalized, and economic rent would 
cease altogether. 

Mr. George's theory is contrary to natural 
justice. The right to individual ownership of 
anything, Mr. George asserts, is derived from 
the right to personal liberty. From the personal 
right to myself and my acts, arises the right to 



NATIONALIZATION OF LAND. I 59 

my labor and fruits. Under this theory strictly 
construed, there is no personal right to anything. 
Nothing on earth was created by labor. The 
pen I write with, is not the product of labor, as 
Mr. George affirms. The material was the pro- 
duct of the occult forces of nature. These forces 
combine the oxygen and carbon, and produced 
the iron contained in it. Man stole the material 
from nature, adds a little of his labor and calls it 
his own. It is his, society consenting, and it 
not interferring with the rights of others. The 
same right exists to any portion of nature or its 
products. The ground I took and cleared, and 
plowed, and seeded, and made worth all it is 
worth. My labor reduced it, and brought it from 
a worthless waste to supply the necessities of 
many. I own it because my labor is incorpora- 
ted in it, my capital fertilized it, because it is for 
the public good, society consenting. 

The system of land holding in Europe, by 
which a certain class, known as peasant proprie- 
tors, are attached to the soil, is much more in ac- 
cord with the theory of Mr. George, and a much 
better solution of the land question than tax sys- 
tem advanced by him. These holdings, estab- 
lished ceturies ago, are on a basis of a perpetual 
rent, established then. These holdings have 



l6o NATIONALIZATION OF LAND. 

been demonstrated to be in accordance with the 
rent theory of Mr. George. Rent, or the natural 
powers of land, never increases. It rather de- 
creases, unless constantly recuperated by labor, 
and added sustenance. The multiplication of the 
power of production, has more than kept pace 
with the demand for products, and hence, rent 
has never risen on the whole, and probably nev- 
er will. The evidence of the rise of rent, says 
Mr. Ricardo, is the increased pressure of popu- 
lation against land, causing a rise in price. This 
has not occurred. What Mr. George and Mr. 
Mill take for the evidence of the rise of rent, is 
the pressure of interest and profit against pro- 
duction. It is this which absorbs production, as 
is evidenced by fact everywhere. 

If this remedy of Mr. George was put in opera- 
tion the only effect would be to drive from the field, 
all voluntary producers of raw products. The bur- 
dens of society would be added to their now too 
heavy burdens, would drive this class of laborers, 
who now work at the very margin of wages and 
profit, utterly to the wall, while those who now 
have all the surplus of production, would have, 
with less effort, the surplus of all society's earn- 
ings. This idea of "free land" is really the one 
which catches the attention of all the men who 



NATIONALIZATION OF LAND. l6l 

fall a prey to the doctrine of Henry George. 
Without reading the work or understanding his 
remedy, they think he means to give them free 
land. Free land with a rent, which could be in- 
creased and must be increased constantly to keep 
up the expenses of government, would be a very 
inviting freedom in actual experience. With a free 
profit, free interest, free to be made what some 
particular class see fit to make them, the producer 
of raw products would be driven to the condi- 
tion of the Irish serf, and the manufacturer and 
transporter to the condition of absentee land- 
lords. 

His theory of poverty, and his theory of rem- 
edy, neither of them touch the trouble in socie- 
ty. If he should change his remedy, so that land 
held by the individuals, as private property, but 
not occupied or used for productive purposes, 
should be taxed at the rate of interest on money, 
and that all land used or cultivated should be en- 
tirely free from taxation, then indeed would Mr. 
George confer a boon upon those whom he seeks 
to assist. This would drive all land out of the 
hands of speculators into the hands of the State ; 
would leave all such land a free common, and 
encourage the pursuit of labor upon land, from 
which originally comes all wealth, and place the 



102 NATIONALIZATION OF LAND. 

burdens upon those best able to bear the same. 
Though this would be in a greater measure just, 
and make an approach to a relief of poverty, be- 
ing really of some service to labor, yet like all 
the remedies before suggested it is but paliative. 
The real trouble then as now, would be that the 
laborer would not get the product of his toil. 

As long as the average of interest is above 
the average increase of wealth, there is no vol- 
untary motive to store wealth below this inter- 
est. And enough wealth would be absorbed out 
of wealth, produced by capital stored below this 
interest from necessity, to pay the higher interest 
and profit on money and capital stored thereby. 

This is unalterable. 

The coming fate is no more certain than the 
operation of this law. 

Turn it or distort it as we may, high interest 
and profit are paid by somebody. The average 
of production pays them ; so that any man who 
goes on to free land, and makes on his capital 3 
per cent., which is the very outside (as table iii., 
appendix, shows), all this would go to pay some- 
body's 6 per cent, profit and interest, and he 
would work for bare wages, his land and capital 
bringing nothing, though in reality above the 
margin of cultivation. 



THE TRUE REMEDY. 163 

And so I am driven to the conclusion, evident 
from the first, that as the true condition of soci- 
ety was veiled from the mind of all writers, so 
it is an impossibility for any one of them, with 
the clouds hanging over their vision, to ever 
conceive of an intelligent remedy. 

The remedy must be broader and more com- 
prehensive, must embrace all the complex rela- 
tions of society, from the beginning of produc- 
tion to the end of distribution ; must compre- 
hend the inate differences everywhere existing in 
men, their powers, capacities, opportunities, 
strength and weakness, diversity of likes and 
dislikes, establish justice upon the throne of so- 
ciety, and secure the members thereof perfect 
liberty without trammel or hindrance, each for 
himself to run his own race to success or defeat. 

The remedies suggest themselves : 

1st. The cause of unjust accumulation of 
wealth, and extreme poverty, are primarily 
caused by the contraction of money. 

2nd. By laws creating a violation of the nat- 
ural law of acquisition of land. 

3rd. By granting special privileges to cor- 
porations. 

To correct the first : 

Make a system of money to conform to jus- 



164 THE TRUE REMEDY. 

tice, so that the average of interest shall average 
with the increase of wealth. 

2nd. Prohibit all estates in land for more 
than life, or lives in being; and, make it free 
to sale and exchange like other property. 

3rd. Should the natural law of competition 
thus established be insufficient to curb created 
monopolies, let the government use public credit 
to compete with them or own and use them on 
the basis of average profit. 

The first of these remedies is radical and in- 
dispensible ; without it poverty and unequal con- 
ditions are a necessity. 

I believe all others would follow as a necessary 
sequence of this. I believe that the stimulous 
thus given to labor and capacity to supply itself 
with opportunities, would so act upon distribu- 
tion that land would be worthless to any person, 
except the producer himself. Under such cir- 
cumstances, no man would be compelled to work 
for another man. He would work for himself 
if he chose. Lest this be a mistake, I include 
the other remedies as a present, possible, neces- 
sary, paliative means of producing equality, 
and it now only remains to ascertain — can money 
be made to conform to justice? How? Or by 
what means? 



WHAT IS MONEY? l6$ 



MONEY. 



CHAPTER II. 



What is Money? 



The essential character and functions of money. 
Its origin and features which distinguish it 
from every other thing in society. 



One of the principal troubles in the promul- 
gation or acquisition of truth, is the fact that the 
human mind, in all its operations, is automatic. 

The amount of knowledge of every individual 
is the result of first or transmitted impressions; 
or, in other words, of education. Impressions 
are engraved upon the memory, like the impres- 
sion of a stamp upon wax, and stay so fixed, 
unless reflection remove them, or other impres- 
sions take their place. A child first learns the 



l66 WHAT IS MONEY ? 

multiplication table, by repeating over and over 
again, without reason or comprehension — six 
times six are thirty-six. Association gradually 
fixes this succession of ideas, and ever afterward, 
with or without reason, six times six is thirty- 
six. So of any theory, scientific or practical. 
What has been read or been taught becomes 
fixed and fossilized in the mind, and whether 
true or false, it is ever afterward utterly impossi- 
ble to eradicate the impressions thus made. To 
teach any new doctrine is like teaching in an un- 
known tongue. Every man has written upon 
the black-board of his mind some such thing as 
the following: 

" Gold is a standard of value." 

" Silver is a standard of value." 

" Gold and silver are money." 

And although there may not be a respectable 
economist who endorses such a sentiment, yet if 
I, or anyone, should presume to question these 
impressions, the natural ego, the man himself, this 
bundle of impressions, which has been forming 
since childhood, either turns himself away with 
a sneer, or fights against the truth, no matter 
how very true it is, or how much he may be in- 
terested in its being true. So most reformers 
are compelled to await the growth of a new 



WHAT IS MONEY? 1 67 

generation of black-boards, upon which are writ- 
ten: 

" All men are born free and equal." 

"Slavery is a crime against humanity." 

And so it may possibly be that it will take 
a generation to effectually write upon the con- 
sciences of man : 

11 Interest above the average of increase of 
wealth is a crime not second to slavery." 

" A government which maintains such interest 
'is a covenant with hell, etc.' " 

"Freedom and such injustice cannot remain 
long under one government." 

And yet I am constrained by the mighty 
weight of conviction which bears down upon me, 
to believe that these sentiments will be written 
there, and written there speedily, or all free gov- 
ernment, founded, as they are, upon no pretense 
of justice, will pass away and give place to gov- 
ernments of force. Men have no affection for a 
government when injustice is stamped upon its 
laws. The freedom to work for a privileged few 
is no great blessing. Starvation under a mon- 
archy is just as sweet as under a republic. 

I make these remarks in order to impress upon 
any seeker after truth two facts : 



1 68 WHAT IS MONEY? 

ist. The necessity of laying aside for the 
time being, the previous education he has re- 
ceived as to the character and manner of making 
money. 

2nd. The necessity of constantly bearing in 
mind, that it is almost an impossibility to get out 
of any work extant a single correct idea of 
money. They do almost invariably confound 
money with wealth, money with gold and silver, 
interest with profit. When they mean one thing 
they speak of the other, and vice versa, and 
every statement where they use them inter- 
changably must of necessity be wrong. When- 
ever I find Mr. Mill, or Smith, or Ricardo, speak- 
ing of money, as money, they often tell the truth; 
when of money, as gold or silver, they never tell 
the truth. All gold is not money, all money not 
gold. Gold used as capital is governed by the law 
of capital. Gold used as money ceases to be capi- 
tal or wealth, or a commodity, and is not gov- 
erned by the laws of capital or wealth, but by 
the laws of money. 

Having thus cautioned every one to keep a 
weather eye out, I quote Adam Smith as good 
authority on money, when he says : 

Book ii., chapter i. " When by any particular sum of 
money we mean not only to express the amount of metal 



WHAT IS MONEY? 169 

pieces of which it is composed, but to include in its sig- 
nification some obscure reference to the goods which can 
be had in exchange for them ; the wealth or revenue 
which it in this case denotes is equal only to one of the 
two values, which are thus intimated somewhat ambigu- 
ously by the same words, and to the latter, more properly 
than to the former, to the money's worth more properly 
than to the money. Thus, if a guinea be the weekly 
pension of a particular person, he can, in the course of 
the week, purchase with it a certain quantity of sub- 
sistence, convenience and amusements. In proportion 
as this quantity is great or small, so are his real riches 
his real weekly revenues. His weekly revenue is not 
certainly equal to the guinea, and to what can be pur- 
chased with it, but only to the one or other of these two 
equal values, and to the latter more properly than to the 
former to the guinea's worth rather than to the guinea. 
If the pension of such a person was paid to him, not in 
gold, but in a weekly bill for a guinea, his revenue would 
not so properly consist in the pieces as in what could be 
got for it. A guinea may be considered as a bill for a 
certain quantity of necessities and convenience upon all 
the tradesmen in the neighborhood. The revenue of the 
person to whom it is paid does not so properly consist of 
the pieces of gold as in what he can get for it, or in what 
he can exchange it for. If it could be exchanged for 
nothing it would, like a bill upon a bankrupt, be of no 
more value than the most useless piece of paper." 

Thus, Mr. Adam Smith distinctly emphasizes 
what I say, that we are apt to confound the 
credit which is in the money to the pieces of 
gold which carry the credit; or, in other words, 



I70 WHAT IS MONEY? 

this definition is that (a guinea) money is an 
order on society, drawn and authenticated and 
guaranteed to be what its face represents, and 
made to represent credit (all future payments) 
by being made legal tender. That money is a 
function, its positive object being distribution, 
with its concurrent and resultant effects in so- 
ciety heretofore described. 

Mr. Mill, speaking of the essential character of 
money, chapter vii., section 3, book iii., says: 

"It must be evident, however, that the mere introduc- 
tion of a particular mode of exchanging things for one 
another, by first exchanging a thing for mone)^ and then 
exchanging the money for something else, makes no dif- 
ference in the essential character of the transaction. It 
is not with money that things are really purchased. 
Nobody's income (except that of the gold or silver 
miner) is derived from the precious metals. The pounds 
or shillings that a person receives weekly or yearly are 
not what constitute his income. They are a sort of 
ticket or order, w T hich he can present for payment at any 
shop he pleases, and which entitle him to receive a cer- 
tain value of any commodity that he makes choice of. 
The farmer pays his laborers and his landlord in these 
tickets as the most convenient plan for him and them ; 
but their real income is his corn, cattle and hay, and it 
makes no difference whether he distributes it to them di- 
rectly or sells it for them and gives them the price. * * It 
is a machine for doing quickly and commodiously w T hat 
would be done, though less quickly and commodiously, 
without it." 



WHAT IS MONEY? 171 

Thus, Mr. Mill says here that money is a 
means to an end; "a machine" and its function 
is what he long ago told us — "the precise func- 
tion of money is to distribute/' This is one of 
the few places in Mr. Mill's work on political 
economy where he speaks of money. On almost 
all occasions he has gold or commodity value or 
influence mixed up with money value, and there 
is scarcely a statement upon this subject made 
by him, which is not vitiated by ambiguity. I 
shall have occasion to call particular attention to 
these hereafter. 

Mr. Ricardo says : 

"Productions are always bought by productions or by 
services ; money is only the medium by which the ex- 
change is effected." 

He always, however, confounds gold with 
money, and more than any man living or dead 
is responsible for the total want of appreciation 
of money in production. 

Mr. Bastiat says, chapter xxi., translated by 
David A. Wells: 

"You have a dollar. What does it imply in your hand? 
It is, as it w T ere, the witness, and proof that you have, at 
some time or other performed some labor which instead 
of turning to your advantage, you have bestowed upon 
society as represented by the person of your client (em- 
ployer or debtor). This coin testifies that you have per- 
formed a service for society, and moreover it shows the 



172 WHAT IS MONEY? 

value of it. It bears witness besides that you have not 
yet obtained from society a real equivalent service to 
which you have a right. To place you in a condition to 
exercise this right, at the time and in the manner you 
please, society as represented by your client has given you 
an acknowledgement, a title to a dollars w T orth of prop- 
erty, which only differs from executive title, by bearing 
its value in itself, and if you are able to read with you 
minds eye, the inscription stamped upon it, you will dis- 
tinctly decipher these words: "Pay the bearer a service 
equivalent to what he has rendered to society, the value 
received being shown proved and measured by that which 
is represented by me. ' ' 

Thus Mr. Bastiat fully recognizes the fact that 
money is not wealth. That the gold pieces, and 
the silver pieces, and the paper pieces are only 
instruments of credit ; an invention, and creation 
of society to effect distribution. And notwith- 
standing Mr. Bastiat sees this, that the gold is 
not the payment, that the gold pieces or silver 
pieces are for the time being but a check, a 
counter, just the same as a theatre ticket, or a 
ticket at a lunch counter, or in other words that 
money is a public credit given to paper or gold 
or silver by the decree of the State, so as to 
represent its face value, yet in ten lines, or at 
least in ten pages, he will confound money with 
bullion, its functions with its material, and go off 
into just such vagaries as all metalists or mono- 



WHAT IS MONEY? I 73 

metalists. The logic of consequences which 
flow from these definitions are : 

1st. Money being the function given to mat- 
ter, to carry value, and represent public credit, 
it can only be conferred by society through law. 

2nd. That any material which can be made 
to represent a fixed value, can be made money. 

3d. That up to the public credit, it can be in- 
creased or diminished as society chooses, to ac- 
complish the best interests of society. 

4th. That it can be made to represent any 
value desired, or established as a standard of 
payment. 



1 74 MONEY ; 



CHAPTER III. 



By Whom Made. 



Essentially an exercise of sovereignty, and its 
powers confined to the jurisdiction which 
originates it. 



Money not being a creation of labor or a 
natural product, but an invention or construction, 
its functions and powers are confined to the 
jurisdiction in which it originates. Laws of all 
nations differ as to this, as in all other matters. 
There is no law or comity of nations, in regard 
to money. No two nations agree as to what 
shall or shall not be money; or how much they 
shall have, each satisfying themselves, by acting 
without any judgment, or system or understand- 
ing. Thus, about seven-tenths of the world adopt 
as a standard of payment, some form or subdi- 
vision of silver, and make their payments corres- 



BY WHOM MADE. 175 

pond to the price of the subdivisions of this 
metal. About one-fifth of the world use gold 
and silver in some ratio (from 15 to 16 of 
silver to 1 of gold), as a standard of pay- 
ment, and about one-twentieth of the world 
adopt gold as the single standard of pay- 
ment. All these have auxiliary debased coins, 
which by law are made conformable to the gold 
and silver coins in payment, and almost all 
civilized nations, so called, have paper auxiliary 
money, which, redeemable or irredeemable in the 
gold or silver coins, is, by operation of law, made 
to represent the price of the standard of pay- 
ments. These coins and auxiliary paper, by 
operation of law in each government, become the 
representatives of credit, and all contracts and 
credits are liquidated, and put at an end, by 
passing these from hand to hand. The folly, 
therefore, of talking, as most political writers do, 
of gold and silver, as a synonym of money, 
or of using such expressions as " money of 
the world, " is made apparent. Also, the 
folly of continuing the illusion which most 
economists like to do, that money is a refined 
mode of barter; for were this the case (I desire 
this to be noticed) when the government had 
determined what should be the material, fineness, 



176 money; 

and amount of the same to be used in coin, and 
had proceeded to subdivide, coin and authenticate 
their amount and fineness, this would end the in- 
terference of government in business. Each in- 
dividual would then put such prices upon them 
as he chose, receive them or not receive them, in 
liquidating a contract. Such stuff would not be 
money. Half the mistakes of political econo- 
mists are made in trying to class and reason 
about such coins as money. The essential 
power of the nation to make these subdivisions 
represent a particular price and liquidate con- 
tracts, must be added or it is not money. This 
is a national power, ends with the jurisdiction of 
the State. The moment, therefore, gold or silver 
coins or money go. out of the jurisdiction which 
originated them, they cease to be money, and are 
sold by weight as bullion, or are received ac- 
cording to the value which may be legally given 
them, in any country where they may be found. 
This power given by the State is the source of 
the fearful significance of money in society. This 
legal function to represent all exchanges, all ex- 
ertion, all labor, all credit, or future payments, is 
just as important and essential to the existence 
of society as any other function of sovereignty. 
A population of ten to the square mile could 



BY WHOM MADE. 1 77 

scarce survive without some form of money. It 
is as innate as the power to create a court of 
justice or establish an army. It is just as absurd 
and criminal an exercise of this prerogative of 
government to allow an individual to interfere 
with the issue of money, to expand or contract 
its volume, as it would be to allow an individual 
to constitute himself a tax collector, levy taxes, 
determine amount, collect the same and pay 
them out as he saw fit. And when political 
economists, as they frequently do, assert that it 
is of little moment how much or how little of 
money is established in a nation, they are talking 
of the simple, or primitive, or barter use of 
money. This simple use of money can in most 
cases be accomplished by the use of private 
credit as well as by the use of money itself, but 
when we are compelled to go beyond the slow 
accumulation and savings of capital, and utilize 
the forces of nature to the uttermost, this simple 
and purile notion of money must be discarded 
and the functions and powers recognized which 
underlie all great progress in society. The pow- 
er inheres in government, and is essential to its 
existence to confer this function upon money 
than which, there is no one of greater moment to 
the interests of humanity, which, though felt by 



178 money; 

all historians and thinking men, has always been 
obscured, if not wholly hid, by the ambiguities 
by which political economists have surrounded 
it from Adam Smith to Mill and Bastiat. 



OUT OF WHAT MADE. 1 79 



CHAPTER IV. 



Money 



Made out of anything which can be made to 
represent public credit. 



As money is not a product of labor, not grow- 
ing, not fashioned, or made in the sense of mak- 
ing physical things, as it does not labor, but is 
simply a function given to material things to 
convey value, it must be self-evident that it 
can be made out of anything which will 
perform the function, i. e., convey the value of 
the standard adopted as payment. In early 
times, when governments were neither honest or 
stable, and there was, therefore, very little credit, 
gold and silver were used as the best means of 
cheap barter. As soon as society advanced, so 
credits were made, and men made contracts for 



I 80 MONEY ; 

future payments, gold and silver were naturally 
adopted by most nations as the standard of pay- 
ment. History shows that almost every article 
has been adopted by nations for this purpose, 
but most frequently the precious metals ; not, as 
is commonly supposed, because they are a 
" standard of value," but for various reasons, 
among which are : 

1st. Their average cost runs nearer an aver- 
age equation of equality with all other products 
than any other two products of man's labor — or, 
to state it possibly more clearly, they cost nearer 
an average amount of labor, interest and profit 
than other products of industry. 

2nd. Because they resist the erosion of al- 
most all acids. 

3rd. Because they are easily subdivided. 

4th. Because there is considerable labor used 
in producing a small quantity. 

Now, for the above and for one other reason, 
which I find recorded nowhere in political writ- 
ings, I admit that gold and silver are the best 
standards for payment, but that they are fit to 
be commonly used as money I utterly deny. 
This reason is simply as follows: When a nation 
has established any metal of a particular fineness 
as a standard of payment, and made it freely 



OUT OF WHAT MADE. 151 

coined at the mint, the coins at that time repre- 
sent the value of the bullion practically (seniorage 
slightly changes this). Now, this money, when 
so constituted, becomes the public estimate, to 
which all values are referred. Should there be any 
change in quantity, in supply or demand of other 
products, it is at once felt or is reflected in price. 
Should bullion become more plenty, i e., gold 
and silver and a consequent decline in price of 
these metals commence to occur, there is a per- 
petual demand, a place where it can be absorbed, 
a ready sale at the mint, and then it ceases to 
be bullion and ceases to bear prices. If bul- 
lion gets scarce and there is danger of a rise 
in price, the coins will be smelted into bullion, 
and thus bring the price of bullion down. 

In other words, the making money out 
of a metal, of which there is so little, that 
there will always be a demand for all or 
more than there is for sale, will keep the price of 
bullion up to the price of money; and the fact 
that there is always a supply of coin, which can 
be made into bullion, will keep bullion down to 
the price of money. For this reason, far more 
than from the fact of its even cost of production, 
money holds bullion to the price you start with. 
A little reflection will show that, were it not for 



1 82 money; 

this, bullion would change in price like other 
commodities, for it is a product of about 33 per 
cent, profit and interest and 66 per cent, wages. 
Now, the profit and interest in supplies and 
transportation, which are figured into bullion, 
change about as much, and are figured in as 
often as in any business except manufacturing, 
and these changes and fluctuations would im- 
press themselves upon the metal and produce a 
variation of price, were there not a flux into 
which it could flow and be lost. But with this 
balance wheel, coinage, I agree with Ricardo 
that gold and silver are the best and nearest 
standard to determine the price of payment, but, 
as I said before, are unfit for use as money : 

1st. Because of weight; in transportation and 
handling their exclusive use would cost from 
one-eighth to one-half per cent, more than cer- 
tificates. 

2nd. Because they are not easily concealed. 
Insurance against risk render them from one- 
eighth to one-quarter per cent, less value than 
paper. A man can carry $20,000 to $100,000 of 
paper money and no one be the wiser; $1,000 in 
silver weighs sixty pounds; $5,000 in gold is a 
load too heavy for any man to carry any length 
of time. 



OUT OF WHAT MADE. 1 83 

3rd. Abrasion of coin constantly used de- 
stroys about one-quarter per cent, per annum, 
which is an absolute loss of valuable material. 

4th. But the real reason why gold and silver 
are unfit for money, is for the same reason that 
they are so good a standard for payment ; that 
is, they are liable to be coined and uncoined. 
They, as bullion, are capital and in demand as 
capital the world over; this causes them to 
shift from one country to another, not as de- 
manded for money, but more often just opposite 
to the demand and want of money. Now, as I 
have shown a steady, stable, increasing volume 
of money, is the most important element in a 
progressive nation. When, from any commodity 
demand, gold flows out of a country which uses 
it exclusively as a means oi circulating its credit, 
the effect is to contract such credit, leaving be- 
hind business panics and depressions. In the 
country where it goes, it may be consumed as 
capital, or it may increase the money volume. 
If the latter, capital will be stored rapidly and 
business activity prevail. Any change in supply 
or demand of commodities may send it back 
again, leaving behind a like destruction of credit. 
Thus, as it goes from one to the other it pro- 
duces alternate business exaltation and heart- 



I 84 MONEY ; 

rending despair. It would be amusing, were 
it not so sad a picture in the back ground, to 
read our own gifted Carey, as he lauds gold and 
silver to the skies, calling them the God-given 
blessings to mankind; the very means of as- 
sociation, as he calls money, and they as a sy- 
nonym. All the time he seems to be utterly 
oblivious that the gold and silver which comes 
into a country and is made into money, and 
seems, as it stimulates business, to be so great a 
blessing, just left some other country, and is 
liable any day to leave this with ruined homes, 
sorrow, devastation and tears. I am constrained 
of the idea that gold and silver are good for 
to believe, as I see the extent of the influence 
money, "the only money," "real money" and 
the work of devastation wrought, of hopes 
blasted, of nations destroyed, fortunes swept into 
the abyss of ruin, asylums filled with lunatics 
and poorhouses with paupers, of theft and mur- 
der and arson, of the helpless struggle of one 
half of mankind since the dawn of civilization, 
the benumbing of every faculty which exalts 
man above a beast of burden, the stunning of 
every aspiration which lifts from degradation, all 
of which may be traced to such ideas; that if 
the arch fiend of the pit had been called upon to 



OUT OF WHAT MADE. 1 85 

congregate, the most abject and cunning of all 
his hosts, who had been engaged since eternity 
in fomenting schemes of woe and torture, and in 
solemn conclave demanded of them to devise a 
scheme, which in itself should concentrate the 
heights and depths of bitterness and woe for 
mankind, there would, without a moment's hesi- 
tation, have gone up from the lowest dungeon 
depths to the highest wall and battlement one 
wild refrain, "make gold and silver the only 
money." 

Coin gold and silver freely at price as is best 
for the nation, so by the influx of coinage the 
price can be made to remain comparatively sta- 
tionary, and then make money out of paper, 
money fit for civilization, which shall carry this 
value. 



I 86 money ; 



CHAPTER V. 



Quantity of Money. 



Can be made in any quantity and maintain its 
representative value so long as average in- 
terest is not below average increase of 
profit. Errors growing out of confounding 
gold and silver, with money, corrected. 



From what I have already written it would 
seem to be self-evident that money can be made 
to comply with the demands of justice. It is 
the exact and necessary conclusion which can 
alone be drawn from all definitions of money by 
economists. Nevertheless, Mr. John Stuart Mill 
and Mr. Bastiat (and most all modern leaders of 
thought follow them) assert distinctly that money 
is a commodity; that gold and silver are money; 
that the terms are synonymous; that they are 
governed by the same laws, etc., etc. 

Now, I do not wish to leave behind me one 
single vestage of this sophism, and hence will 



ITS QUANTITY. I 87 

quote Mr. Mill's statement, and thus prevent any 
misapprehension or misunderstanding. Book iii., 
chapter viii., section 3, he says: 

" Money is a commodity and its value is determined 
like that of other commodities." * * * Chapter viii., 
section 2. "The value of purchasing power of money 
depends in the first instance on demand and supply. 

* * * The supply of commodities means the quantity 
offered for sale. * * * In point of fact, money is 
bought and sold like other things when other things are 
bought and sold for money. 

"Section 4. The propositions we have laid down re- 
specting the quantity of money in circulation must be 
understood as applying only to a state of things in which 
money, that is gold and silver, is the exclusive instru- 
ment of exchange, and actually passes from hand to hand 
at every purchase, credit in any shape being unknown. 

* * * That an increase of the quantity of money 
raises prices, and a diminution lowers them, is the most 
elementary proposition in the theory of currency. ' ' 

These quotations embody the sentiment which 
pervades and perverts every department of edu- 
cation, and utterly incapacitates society from ap- 
preciating or utilizing the money function. That 
the casual reader should be misled by statements 
made with such apparent confidence and candor, 
is not so very strange, but that teachers, edu- 
cators and critics, in the light of facts which he 
knew and they knew, should be led to sanction 
such absurdities and contradictions as these quo- 



i 88 money; 

tations necessitate, if read Utterly, is a wonder 
too marvelous for comprehension. 

Now, when Mr. John Stuart Mill made such 
statements he knew at the time that there was 
gold and silver plate in England, there was jew- 
elry and watches of gold, which were not money, 
and therefore when he said gold and silver are 
money, he knew he was making a statement 
which was not scientific. Mr. Mill knew, that 
the Court of King's Bench of England had de- 
cided that the statute makes the coins money ; 
that the common law of England had, from time 
immemorial, decided that damages on contracts, 
or liquidated damages, must and could only 
be paid in money, and he knew that gold and 
silver could not do this. He therefore knew 
that he was stating a scientific and legal untruth, 
when he made this statement. He further knew 
that gold was not money in China, in South 
America, Japan or India. He knew that silver 
was not money in England. He knew that, and 
says in the very next section, just quoted, "that 
it is not with money that things are really pur- 
chased;" that " money is the mere instrument 
of transfer;" "was a ticket; " " was a machine." 
He knew that money had been made out of 
everything, and at the time was made out of 



ITS QUANTITY. 1 89 

copper, gold silver, tin, paper. He knew at the 
very moment he wrote, that there existed in the 
British Isle, a money (he says it is money) made 
out of paper and only paper — non-redeemable, 
non-exchangeable — absolute money, fiat money, 
if you choose, created by law, that law called 
Peel's act. Now what is the meaning of all this 
jumble of inconsistencies and contradictions? 
Are we to suppose that Mr. Mill, in a scientific 
work, proposes to wipe out the records of time, 
the decisions of courts, and, above all, existing 
patent facts? Or did Mr. Mill make a slip when 
he here called gold and silver money ? 

The simple truth is, he was not talking about 
money. He was talking about gold and sil- 
ver — a commodity, the product of labor — and 
the effect of the increase as to the demand, on 
price. He says this as plain as he can in the 
quotation marked section iv. Substitute "gold 
and silver " for money in all the previous quota- 
tions, and they sound rational. The last quota- 
tion has no sense or reason as applied to money, 
or currency, but in an off-shoot of the old am- 
biguity, confounding gold, the material, with 
money, the function. Any other interpretation 
(a literal interpretation) leads to absurdities as 
follows : 



190 money; 

1st "A" goes into the exchange at 10 
o'clock, and corn is worth 40 cents per bushel, 
and wheat 60 cents per bushel. He goes in 
again at 1 1 o'clock and corn is selling at 39 
cents per bushel, and wheat at 61 cents per 
bushel. Mr. Mill's proposition is : That corn 
brought 40 cents an hour ago, and the same 
corn brought only 39 cents now, and hence 40 
cents has gone up one-fortieth. And just the 
other way with the wheat. The same penny is 
worth just one-sixtieth less. Therefore, political 
economy, by John Stuart Mill, " Money is gone 
up and money has gone down," at one and the 
same time. Mr. Mill is riding two horses again. 

Absurdity No. 2 : That the making of more 
or less gold into money alters the volume of 
gold the world over, and decreases its price. I 
have just shown that this coinage raises the price 
instead of decreasing it, and tends to hold gold 
and silver steady in value. Authorizing its coin- 
age makes a new use for the metals. 

3rd. That the transportation of a quantity of 
gold or silver from one country to another, and 
it there being coined into money, would raise 
the price of all products there. 

The only reason it goes at all is to balance 
exchanges ; that is, the products of one coun- 



ITS QUANTITY. I9I 

try are purchased in excess of products sent 
from the other ; gold and silver fill the gap. Now 
if Mr. Mill's theory were true, and the prices of 
other commodities rose, they would immediately 
be supplied from abroad, and the gold would 
slide back where it came from. If they stay, it 
is because commodities do not rise. Evidently, 
therefore, this money does not necessarily have 
anything to do with prices. It may be used by 
the man who receives it to pay labor. He may 
hire hands, who were idle before its advent, and 
put them onto land or into factories, and they 
immediately go to producing their own wages, 
and a surplus over, which will go onto the 
market and again lower prices, and again bring 
over some more gold, which will again do the 
same. 

This is precisely the condition that has been 
going on in the United States for nine years. 
The gold and silver money has more than 
doubled in this short space of time, a large 
share of it from importations. Over eight hun- 
dred million, of this currency has come into cir- 
culation during this period, and instead of having 
depreciated, its relative general value as com- 
pared with product, is higher (i. e. it will pur- 
chase more product) than at the beginning of the 



I92 MONEY ; 

expension. The only perceptible effect, has 
been the most extraordinary increase in produc- 
tion ever recorded in history. The advance in 
wealth of the United States has always been the 
marvel of time. With wonderful resources of 
land and natural opportunities, with a strong, 
progressive people, wealth grew spontaneous 
under the hand of industry, but we had a curse; 
we had a lie written on our portals, i. e. "gold and 
silver are money," and so we toiled, and we gath- 
ered a little production together, and we sent our 
raw products, which has 12 per cent, of labor 
(see appendix, table vi.), over to foreign coun- 
tries, where they had established manufacturies, 
and we brought them back, with 35 to 40 per 
cent, of interest and profit added, and the 40 per 
cent, profit took all our raw product and left us 
in debt, and this balance of debt we were com- 
pelled to pay in gold and silver, and as they were 
our only means of circulating our credit, when 
they were gone there were no means of liquidat- 
ing debts, and a panic ensued. Under this 
disadvantage, our wealth during this period ad- 
vanced from 1 to 1 y^ per cent, per annum. The 
necessities of the war compelled the American 
people to abandon this false and fraudulent theory 
of money, and the force of a growing education 



ITS QUANTITY. I93 

on the subject of money drove the rulers in 
America to abandon the suicidal policy which 
gave the country into the hands of foreign money- 
changers (or rather men who loan us wind, and 
charge us high interest); we locked the door 
on this uneven competition, in which we, with 
interest at 6 and 7 per cent., are compelled to 
work against competing capital at 2 and 3 per 
cent., and the result is, that money has doubled, 
all products have, on the average, decreased in 
price, and our wealth has advanced, according ±0 
the sworn statement of appraisers, at 3^ per 
cent, per annum, and more than this by the esti- 
mate of men well posted in such matters. Never 
were such results realized before in the world's 
history. If we have the wisdom to go on and 
increase the quantity of money until interest 
drops to meet the rising tide of production, no 
human mind can foretell the height of grandeur 
and happiness which is in store for the republic. 
If we fail to see this, no tongue can depict the 
depths to which she will plunge. 

4th. That a commodity which has a perpet- 
ual demand for its use at a perpetual price, should 
change materially in price, is too absurd to argue. 

5th. That when there is not enough gold or 
silver to supply one-quarter, or at best one-half, 



194 money; 

the demand for money at a perpetual price, a 
little or a greater quantity coming into a country 
should raise or decrease its price. 

6th. The patent, ever present fact, reluctantly 
conceded by Mr. Mill, but plainly stated by Mr. 
Adam Smith, and known of all men everywhere, 
that the use of money in simply exchanges is 
not the only or the most common use of money, 
but that everywhere, in every nation on earth, 
since money was invented, or used, there has 
been, is now and ever will be a constant, press- 
ing, earnest competitive demand, for money for 
other purposes than barter, for money to loan 
and to store capital, and when any one can go 
into the market with this same money, paper, 
gold or silver, in any country in Europe and sell 
futures on it, i. e., sell the same money to be de- 
livered back at the end of one year or six 
months at an increase double what can be had 
by the use of average capital in any such nation, 
any one can see the climax of absurdity of say- 
ing the quantity of money will cause it to de- 
preciate, as says Mr. Mill, or that it will flow 
out, leaving just enough for barter, as says Mr. 
Smith. There is a perpetual demand for more 
money for this purpose than has ever been cre- 
ated. 



ITS QUANTITY. 1 95 

If fifty or one hundred millions of money could 
be injected into the circulation of the United 
States, instead of depreciating its price, 20,000 
or 30,000 men would go to work who now 
work but part of the time. The whole sum 
would be absorbed in new production com- 
menced, or in handling production already com- 
pleted, and by the time this was fairly absorbed 
more would be needed. This has been done in 
the United States, every year, but one, for nine 
years. No nation of modern times has ap- 
proached the capacity to produce, because they 
have not realized the importance of this influence 
of money. The recuperation of nations after 
great wars or conflagrations demonstrates that 
there is an inert force, never called out in society, 
which could and would push the wheels of pro- 
gress beyond the capacity of ordinary concep- 
tion, were this not checked. 

The better theory and true theory is fast gain- 
ing ground that money, as money, has nothing to 
do with making prices, as Mr. Mill says in the 
quotation on the nature of money. As money, 
it is simply the equation of relation between 
commodities — carries or represents value almost 
unchangeable, being about the same in cost of 
production. 



196 money; 

But the most satisfactory proofs of all theories 
are facts. Tested by these, it is almost enough 
to make an angel weep for humanity, when we 
read these theories of economists in the light of 
every day occurrences. 

France has three times as much money as the 
United States, twice as much as Great Britain in 
proportion to population. If Mr. Mill's theory 
had any truth in it, an ounce of good gold would 
be worth three times as much in the United 
States as in France, and twice as much as in 
Great Britain, and products would be vice versa. 
We draw a veil over the bantling of " gold 
money," " commodity money," and rear an altar 
to its memory with an inscription on it : " Died 
young. ' "Died of too much cold fact." 

And in our sorrow go back to our demonstra- 
tion and the authority of Adam Smith, which 
shows that the increase of money necessarily de- 
creases the price of all products in which in- 
terest and profit enter, and only raises the price 
of raw products by an increased production, in- 
creased demand and increased wages; and af- 
firm, without a doubt or hesitation or fear, that 
money can be created enough to answer the 
ends of justice. 

How much? There is no light upon this sub- 



ITS QUANTITY. 1 97 

ject in the history of the world. As no nation 
ever attempted to solve the mystery, it is a mys- 
tery to-day. What should be the rule is to sup- 
ply a quantity of money sufficient to meet the 
wants of trade, and have enough over to loan, to 
bring interest down to the average increase of 
wealth. If, by any careful process of computa- 
tion, it was found to be 3 or 4 per cent, gradually 
infused into the circulation, money enough to 
reduce interest to this amount, or make an au- 
tomatic arrangement so money could be had at 
this per cent. 

Samples are around us. France has $50.00 
per capita of money composed of gold, silver and 
paper. She has her interest very low, from 3 to 
3^ per cent, for good mercantile paper. I am 
not informed as to the rate of her increase of 
wealth. But I know that within an area of about 
three-fourths the State of Texas, a portion of 
which, by ancient land usages, is kept from the 
free use, according to the ordinary laws of com- 
petition, she subsists a population of nearly forty 
millions of people. She is surrounded by war- 
like monarchies, who compel her to expend 
enormous sums upon a standing army and navy, 
to keep out of productive employment a half 
million of her most able bodied producers ; to 



I98 MONEY ; 

pay interest on a debt four times as large as that 
of the United States; yet her people live and 
prosper, and there is not a great deal to boast of 
in wealth, prosperity and wages between the two 
republics. Put all the population of the United 
States on a proportionate area of land, say upon 
the land of Pennsylvania, Ohio, Illinois, Indiana 
and Iowa, leave the interest on money as it is, 
and give them the additional burdens that France 
has, and the government would last probably 
two months. 

I do not say $50 or #40 per capita; I simply 
say, make enough to conform to justice; and I 
further say, that any constitution which does not 
provide for the issuing of money enough to keep 
interest down to the average increase of wealth, 
in the language of Wendall Phillips, is: 

" A league with hell and a covenant with the 
devil." 

And I am far more justified in saying this, 
than of a constitution upholding African slavery. 
That was only the debasement and robbery of 
the labor of a class ; this is the robbery of the 
human race. Worse yet ; it bars them from the 
use of their labor, from opportunities provided 
by Providence, and compels them to stand idly 
by and witness the aged mother and helpless 



ITS QUANTITY. 1 99 

babe wither and pine from hunger and want of 
bread, which this very government gives, by this 
very mode, to some glutton or debauche. 



200 MONEY ; 



CHAPTER VI. 



How to Give Par Value. 



Rules which should govern the issue of money. 



It is not the intention of this work to enter 
into the particulars of the details of government, 
or to enlarge upon particular modes of accom- 
plishing results. My desire will be accomplished, 
if I impress upon the mind of the reader, in the 
shortest way possible, the facts which underlie 
the progress of the race, so that they may be 
understood and appreciated. 

In this age of progress, we are fast learning 
that the wellfare of man cannot be pinned to the 
dictum of any theorist. One by one of past 
idols are being shattered by newly-born facts, 
and proofs furnished that men are but men. The 
car of progress waits upon no man. If he puts 
his punny individuality before the wellfare of 



HOW MADE. 20 1 

many, it will grind him to powder. Representa- 
tive men in every generation present the most 
advanced thoughts of their day, but it is seldom 
unclouded by their own personality, or the prej- 
udices or necessities of their nationality. Mr. 
Smith, in his exposition of the errors of the 
Mercantile system, undoubtedly demonstrated 
that gold and silver are not objects of commerce, 
and he was, therefore, supposed to have demon- 
strated that money was of no account, and that 
only so much money would stay in any country 
as could be used under a system of barter; that 
as a broad, scientific fact, free trade among 
nations was the true interest of all men. 

Solid fact has so altered all these theories, that 
their author would not recognize his progeny. 
They have shown and demonstrated, that so far 
as gold and silver are concerned they are of lit- 
tle moment to humanity; that were they both 
thrown into the crater of Vesuvius, the world 
need not stop or be impeded in its onward 
march, but they have also demonstrated that 
after a certain stage of development, money is 
absolutely indispensible to the progress of a 
race. 

Has demonstrated that free trade may or may 
not be for the best interests of man. 



202 money; 

That what is good for one nation is seldom 
good for another, or her people; that the good, 
or rather the upbuilding of some nations and 
their institutions, is not for the good of human- 
ity; that free trade is always an arbitrary ques- 
tion, and always more or less directly and arbi- 
trarily dependent upon the question of money. 

That any nation which so regulates its money 
as to have an advantage of I per cent, interest, 
other things being equal, can break down all the 
industries of any other country laboring under 
this disadvantage; that this interest is purely an 
arbitrary matter, regulated by the quantity of 
money, or representative of credit, issued by the 
State. 

That what Adam Smith says is absolutely 
true : " In countries which are fast approaching 
to riches, the low rate of profit in the price of 
many commodities, compensate the high wages 
of labor, and enables those countries to sell as 
cheap as their less thriving neighbors, among 
whom the wages paid to labor may be much 
lower. In reality, high profit tends much more 
to raise the price of work than high wages." — 
" Wealth of Nations/' book i., chapter ix. 

This means, that profit following interest at 
the top of production is necessarily added into 



HOW MADE. 203 

all articles which are manufactured, or go through 
several processes before fit for final consumption, 
and that thus a large share of their cost and 
price is interest and profit. Table vii., appendix 
hereto, shows that the average of this profit and 
interest from simple to complex in the United 
States was, in 1880, over 35 per cent.; that the 
difference of I per cent., therefore, in interest 
makes from 8 to 18 per cent, in cost, a difference 
which would break most manufacturers ; that 
England, with an absolute paper money, provided 
by Peel's act, and France by simple law creating 
paper money, have it so arranged as to provide 
for an artificial, arbitrary low interest on money, 
and could, through the results of this, undersell 
all outside nations and absorb their raw products, 
almost all of which is labor (see appendix, table 
v.), and pay them back in profit and interest, a 
large share of which is wind and wind dupli- 
cated, and thus grow fat on the cream of their 
labor, and let outsiders grow fat on skimmed 
milk and wind pudding. 

Mr. Mill wrote as an Englishman of his class. 
If he did not see these truths, he felt them, and 
wrote political economy from the sense of his 
feeling. He evidently never borrowed any 
money. If he had, he would have soon under- 



204 MONEY ; 

stood that he had not got anything to eat, drink 
or wear, but he would find that at regular inter- 
vals he would be invited to walk up and deposit 
something produced by his labor, to compensate 
for the privilege of keeping in his safe this some- 
thing, which was not giving him anything in re- 
turn. He would find if he parted with it, i. e., 
the borrowed money, for something which was 
capital, with which and his labor, he could pro- 
duce this compensation, that possibly he could 
out of this get enough to pay wear and tear, 
wages, and this regular installment of interest. 
After a time would come a notice: " Times are 
very tight, and we shall be compelled to ask 
more interest." He knew this already in his 
slackened demand and fall of profits, etc. ; then, 
as the interest went up and the profit down, he 
would commence to perceive that profit and in- 
terest were two different things, and after about 
three weeks of walking the floor nights, study- 
ing how to make a three-inch auger bore a seven- 
inch hole, he would know that interest was not 
profit. The work of Mr. Mill should have been 
entitled : " The Science of Political Economy, 
Adapted to the Best Interests of the British 
Landed and Manufacturing Aristocracy." 

Fortunately, time and facts knock the sophisms 



HOW MADE. 205 

out of science. So, if the United States, Mexico, 
Argentine Republic, or other nations unburdened 
with aristocratic institutions, can once grasp the 
magnitude of the questions herein contained, and 
coin their own credit so as to reduce interest and 
keep money increasing at such rate as to keep 
ahead of an increased demand, which any in- 
crease always creates, they can send their flax 
and their hemp, their cotton and iron to the ut- 
termost nations of the earth, not as raw pro- 
ducts, but as cheap as they now send raw pro- 
ducts, and then pay better wages than now for 
their production. They can send them in their 
own iron vessels, and send them direct to China 
and Japan and the islands of the sea, instead of 
sending them to England, as we now do, borrow- 
ing her cheaper credit to distribute them, be- 
cause at 6 or 7 per cent, we cannot afford to lay 
out of the use of the value of the products for 
six to twelve months. 

To send it, as we would now have to do, in 
vessels, whose cost is recorded in money at 6 to 
7 per cent, produced on land, which must pro- 
duce 6 to 7 per cent, or lose, with implements 
and freights, and warehouses, and replacement, 
all to be transacted in credit, which must bring 
these large interests, creates a difference in re- 



206 MONEY ; 

suits of from 18 to 30 per cent., and causes a 
clear give away of all foreign commerce to na- 
tions who construct money on a different basis. 

Should these facts once take possession of the 
minds of clear-headed representative Americans, 
some other John Stuart Mill will be compelled 
to write another scientific work, and such state- 
ments as the following will constitute a part of it: 
" Owing to the fact that the British government 
has seen fit to overrule the decrees of divine 
providence by demonitizing silver, and, there- 
fore, render it unscientific to call silver money, 
I, therefore, yield to the higher power and call 
gold, money " * * " Owing to the fact that 
wheat and other products of industry are com- 
ing into England and breaking down our in- 
ternal industry, I am of the opinion that science 
is a little wrong in its mind about the protective 
tariff." 

Time and facts have wrought other wonderful 
changes for the better, in men's opinions, on the 
powers, duties and privileges of government. 
They have rooted out the heresy that liberty 
means license; that private greed, or cunning, or 
self-interest, shall be permitted to destroy the 
source of human happiness, and while we still 
write over our portals "that government is the 



HOW MADE. 20/ 

best which gives the greatest freedom consistent 
with the public good," we now write the " public 
good" in large capitals. 

Thus, facts, solid and real, have swept from the 
sky of him who has the vision to see the very 
coming day dawn, all the black shadows which 
have obscured the morning of man's deliverance. 
Those brooding buzzards, the doctrines of Ri- 
cardo and Malthus, which have been gnawing at 
the hearts of men like black despair, accusations 
against the bounties of that providence, which 
bedecks every hilltop and sends blessing in 
every sun's ray, hie themselves to the regions of 
the damned, and every means to bring equality, 
justice and human happiness to man, illumine 
the way, if he is willing to walk therein and par- 
take. 

Let men carefully and conscientiously use the 
means, to correct existing errors which thus pre- 
sent themselves, and all else follows. 

The rules which should govern the issue of 
money are : 

1st. It being a function of sovereignty, money 
should only be issued by the government and 
not delegated to any individual or corporation. 

2nd. It should be a legal tender in the pay- 
ments of all debts. 



208 MONEY ; 

3rd. All money by convertibility, exchanga- 
bility or security should be made at all times to 
represent, and equal in value, the standard of 
payment of other nations. 

4th. It should be issued in such quantities, 
and circulated through banks or public deposi- 
tories, as to maintain in all parts of the nation a 
uniform interest on the same principles that mail 
service is alike for all. 

5th. Make the volume to increase in propor- 
tion to increased needs, so as to result in an 
equation of interest, as near as possible, with the 
percentage of advancing wealth. 

6th. Make no sudden or violent changes of 
currency, but a gradual pressure of money 
against business, until it is determined to what 
extent production would increase, and, when 
found, maintain it there. 

The practical details should be left to a bureau, 
who should be clothed with power to originate a 
scheme by which this, the most important func- 
tion of government, could be exercised in a man- 
ner consistent with an intelligent system to ac- 
complish justice. I shall briefly notice some of 
the ways in which money is, has been and can 
be made: 



ITS QUANTITY. 209 

1st. Bottomed on taxes, as our greenbacks 
now are; such money would derive its value 
from being made a legal tender and from its tax- 
paying power. Any man who has a tax to pay 
in gold or its equivalent a piece of paper clothed 
with power to pay that tax, is equal to gold to 
him for that occasion. There are seven hundred 
millions of dollars of taxes to pay each year in the 
United States, or an absolute gold redemption 
of seven hundred millions of dollars to redeem 
three hundred and forty-six millions of dollars 
of this paper now in circulation. The govern- 
ment keeps up the pleasant fiction of converta- 
bility, and keeps a large amount of coin in the 
treasury, but hardly any of this is ever called 
for, and fifty thousand dollars would have served 
this purpose just as well as to have had the vault 
of the treasury full. 

2nd. Coin gold and silver free, but save the 
expense of coinage by using a certificate issued 
upon bullion. 

I wish to say, by way of parenthesis, that there 
is but one explanation of the attempt on the part 
of several leading commercial nations to degrade 
silver. It is the explanation which this book 
makes plain. It was the manner taken by that 
class of people, who always calculate to keep 



2io money; 

currency so controlled as to realize high in- 
terest, and result in high profit by loan of their 
credit. Silver is just as good a metal, more uni- 
versally esteemed and older in its use as money 
than gold. It is far more reliable from these 
considerations to maintain an even value than 
gold. The object was to decrease the quantity 
of money and keep up interest, nothing else. It 
was a direct thrust at all silver producing coun- 
tries and all other production everywhere; an 
attempt to increase the power of the non-produc- 
ing factor of distribution over production. Why, 
therefore, a large amount of sycophantish sym- 
pathy should be extended to this scheme by 
Americans can only be accounted for, on the 
grounds that they have more interest in interest 
than they have in prosperity and production. 
Now that the force of public sentiment has 
driven our government in the right direction, 
there is a puzzle yet to get back to free coinage 
without a shock. 

It can be done : 

Either by passing a law compelling the secre- 
tary of the treasury to coin five or ten millions 
of silver more than is produced by the United 
States ; this would create a demand for foreign 
silver, and thus cause silver to go to par — 



ITS QUANTITY. 2 1 I 

Or by law compelling the treasury department 
to advertise for the silver required for each 
month's coinage on or before the ioth of each 
month and purchase the same at public or pri- 
vate sale, and thereafter during such months 
issue certificates upon all bullion which might 
be offered at the treasury department ; such cer- 
tificates to be issued at the par value of such 
silver, at the price of such sale, redeemable in 
standard silver dollars. This would dispose of 
all silver on the market at this particular price, 
and the next sale would be higher, and in a 
short time silver would be at a par with gold. 

I believe that the United States can absorb all 
the silver in the world for sale at its present 
relative par value with gold, and then, with all 
the gold added, not make money as fast as it is, 
and will be demanded by the momentum of our 
increasing population and business. The people 
of the United States are fast approaching the 
condition when they will commence to shut 
down their factories, and the voice of the tramp 
will be heard in the land, unless there is an in- 
crease of the money of the country faster than 
any device now provided to this end. Even Mr. 
Mill says a steady volume of currency is a 
necessity in any country. The population of the 



212 money; 

United States is said to be increasing at the rate 
of from 4 to 5 per cent. The money volume is 
as much as 50 per cent, behind our present busi- 
ness, and has for four years increased less than 
3 per cent. This means a crash. 

There is but one trouble about depending 
upon silver for money after it goes to par, and 
that is, it is the common currency of seven- 
tenths of the world, and at par would flow out, 
instead of other commodities, to foreign coun- 
tries, as it always did before the war. It should, 
therefore, be coined with a seigniorage, which 
would make the coins of more value at home 
than abroad, and issue certificates upon gold and 
silver at full weight, redeemable in coin. It 
would thus in a slight degree, just as much as 
the law can interfere with commerce, give a 
bonus to ship other commodities, instead of gold 
and silver, and thus prevent fluctuation in the 
volume of coined money or coin certificates, but 
if this failed as silver departed, a paper money 
based upon other wealth, which would not be 
exported, should be issued so as to keep the 
money volume sufficient to meet the demands of 
justice. 

3rd. The system of land-scrip, which was ad- 
vocated by Edward Kellogg, might be of use, or 



ITS QUANTITY. 213 

a system based upon mortgages at such a valua- 
tion that they would always bring gold or silver 
par valuation, such as a loan to western farmers 
at 3 per cent., taking their mortgages as a se- 
curity for a certificate made full legal tender. 
These mortgages are now good security to indi- 
viduals for loans at 10 and 12 per cent, of hun- 
dreds of millions of dollars. They would be 
five times as good security at 3 per cent., and 
would place the producer on the farm upon 
something like an equal footing with other classes 
in society. 

4th. Money could be issued upon bonds di- 
rect to the people, as it is now issued to na- 
tional banks. 

5th. Money could be issued upon a bond at 
a low rate of interest, as advocated by a large 
class of our currency reformers. 

6th. I suggest that, as a possible remedy to 
the existing exactions of combined railroad mo- 
nopoly, that it may be regulated by the govern- 
ment competing with them at the margin of in- 
creasing wealth. As a means of solving two 
problems in one, the compulsion of the railroads 
to comply to the laws of justice, and the afford- 
ing a means of adding a needed currency, I pro- 
pose that the United States construct a four- 



214 money; 

track railroad from the principal eastern cities — 
Boston, New York, Philadelphia and Baltimore 
— to connect with Chicago, Cincinnati and St. 
Louis, and through, by one or two routes, to 
San Francisco. That this railroad be paid for 
by certificates issued by the United States and 
made legal tender for all debts, and that the re- 
ceipt of this road, run at a net profit of 2 or 3 
per cent., be placed in the treasury as a redemp- 
tion, or exchange fund, to insure ready converta- 
bility to these certificates. That they be ex- 
changeable, if thought best, with a bond bearing 
2or2^ per cent, interest, issued upon the value 
of this road. That power be given to change 
the rate of interest upon these bonds from time 
to time, as may be necessary to keep them at 
par or from appreciating in value. This would 
settle the question of freights and railroad traffic 
justly, so far as the great bulk of travel and 
freights are concerned. A money would be 
made, which, in security, convertability and elas- 
ticity, would be the acme of all money ever 
created upon earth. The system would be su- 
perior to the one provided by the act of Peel in 
England, in that it always provides its own re- 
serves, and is j ust as secure in all other respects. 



ITS QUANTITY. 2 I 5 

In the same way the exactions of the telegraph 
may be disposed of. 

But why enlarge ? Money is now made, and 
has been made since civilization dawned, out of 
many things. Mr. Mill says, "Anything is 
worth whatever can be got for it." Make all 
money so as much value can be had for it, as the 
value of the standard adopted as payment, and 
enough to bar injustice, and then, and not till 
then, shall come the time, when the thoughtful, 
the prudent, and industrious, can eat the fruit of 
their own labor, and the idle and careless shall 
eat the fruit of their folly. 



2l6 CONCLUSION. 



CONCLUSION. 



The law of the universe is immutable and 
unchangeable. Sequence follows sequence as 
night follows day. "The soul that sinneth, it 
shall die/' is written in the law of nations, as 
upon the law which governs individual life ; not 
as punishment or malediction, but as the natural 
outcome of cause and effect. The nation that 
ascribes upon its escutcheon "injustice/' or places 
a barrier against the exercises of equal privi- 
leges, writes therein its own epitaph. The 
power which gives it into the hands of one man, 
or a class of men, to gather the fruit of other 
men's labor without adequate return, saps the 
foundation of self-respect and honor, dries up 
the fountain of justice and benevolence, and, as 
a consequence, brings pride of wealth or caste 
distinctions, based not upon manliness or honor, 
but rather, on the pride born of arrogance and 
base ambition; and just as certainly upon him 
who is despoiled, the ceaseless envy, rancor and 



CONCLUSION 217 

hatred which debases and benumbs every manly 
instinct, and spawns the spirit of foul and loath- 
some deeds which walk in darkness, and delight 
in blood and revolution. 

This is the influence of that potent power we 
have outlined, and forms no exception to the 
rule. From the dawn of civilization it has exem- 
plified this law. Born with the necessities of 
organized society, it has sat upon the throne of 
all nations. Nehemiah found it in the vineyard 
of the Jews. The day of release, and the year 
of jubilee are the shadows which it cast across 
Jewish law. Christ found it in the temple. Rome 
succumbed as much to it as the Goth or Vandal. 
It held sway during the night of the middle 
ages, and it has ensconced itself upon modern 
civilization. Insidious in its operation, it has 
blinded the eyes and benumbed the faculties of 
all scientists and thinkers. Through their 
errors which I have shown, has entered and 
occupied the church, so that the clink of its 
gold paralyzes the tongue of the servant of Him 
who scourged it from the temple ; has conquered 
the press ; has controlled legislatures ; has mis- 
directed the energies of the philanthropists, and 
warmed beneath the robes of liberty; it gnaws 
at the heart of the republic. 



2l8 CONCLUSION. 

And the question of questions which now 
confronts civilization is, what shall the harvest 
be? Will the scientist turn from error and 
teach the truth ? Will the pulpit scourge this 
leprosy from the temple as did the Master? 
Will public teachers and the press turn from 
injustice and battle for the rights of all men? 
Will the vast mass of producers and capitalists 
who groan under the heat and burden of exac- 
tions too grievous for endurance, raise their 
voices once for wife and child, and equity, and 
humanity? If so be it that they may, then, 
and only then, can it be said that the race is 
born who is fit to unveil its face in the presence 
of liberty ; and if this, the harvest is to be, we 
stand at the dawn of the brightest day which 
ever greeted the sleeping eye of seer or sage, or 
prophet. 

No human mind can conceive of the capacity 
and power of labor to supply the wants, com- 
forts and necessities of life. Everywhere in 
society men work but a part of the time or 
stand idle; everywhere in nature, on sea, on land, 
on hill, and in valleys are idle opportunities 
inviting them to toil. The city of Chicago, 
made up of miles and miles of solid stone and 
iron structures, was laid waste in a single day. 



CONCLUSION. 219 

In scarce two years there was built in its place a 
city far more complete, substantial and attractive. 
The labor which performed this marvelous feat 
came mostly from a circuit of one hundred miles, 
and was scarce missed in other productions. I 
think a score of such cities could be built in the 
United States each year and not lessen present 
production. It could be done by the labor and 
capital now pinched out from the possibility of 
using producing opportunities by reason of high 
interest. This is a crime against production, a 
crime against labor, a crime against humanity, a 
crime against civilization. Remove this barrier 
against production, make the motive to store 
capital greater than the motive to store money, 
and all opportunities are at once opened up. 
The barren hilltops and the dessolate valleys 
shall teem with verdure, and nurse the vine and 
shrub laden with blessings. The gleaming sickle 
shall sing in the golden grain, and the swaying 
meadows, making melody with the laughter and 
mirth of the gleamers, and the burden of the 
song shall be, " No more suffering from want." 
The sea, and rivers and oceans shall be dotted 
with white-winged messengers, bearing to every 
tribe and kindred and tongue, and gathering in 
return whatever conduces to the happiness and 



220 CONCLUSION. 

welfare of men; from the rising of the sun until 
the going down thereof, shall be heard the sound 
of axe and hammer, fashioning homes in place of 
hovel and tenement. 

And care shall flee. 

And doubt shall flee. 

And dread shall flee. 

And what are care and doubt and dread ? They 
are the black sisters who sit and brood and 
brood upon the hearts of men and mothers, from 
hovel to palace ; the children of the parents who 
now bar men's labor out from the sunshine and 
want and love of God's bounties and blessings. 

The parent of the instinct of the miser. 

The mother of despair. 

As they go, along with justice and plenty, will 
come equality; not forced equality, but the 
equality of nature; equal returns for equal ser- 
vice; equal rewards for equal culture, capacity 
and application ; not equality from pulling any- 
body down, but by lifting labor up ; not by in- 
juring or taking anything or any right any other 
person possesses, but by establishing justice, 
now denied, and granting the right to laboring 
men, under the inherent power of the laws of 
nature and nature's God, to build themselves up 
to an equality with other men. 



CONCLUSION. 221 

The banker, then, would receive an equivalent 
for all the benefit conferred by the use of his 
money with less liability to loss. The manufac- 
turer would save in the fall of interest, and 
would be driven by new demand of production 
to use more capital, and at lower profit would 
make sufficient to satisfy all rational desire, while 
the increase of production would go to labor and 
the producer of raw product, and raise him to 
an equality with the other factors of production 
and distribution. 

The result of a just return will afford rest and 
chances for intellectual culture. The reward of 
high endeavor will quicken mental perception 
and activity, and multiply and remultiply inven- 
tions and devices to facilitate production, until 
mere getting and accumulation will cease to be 
the object of the producer. The chief motive 
for greed and cunning and overreaching will dis- 
appear, and the importance and dignity of labor 
will then be recognized as the beginning and end 
of all vigorous, intellectual, moral and physical 
growth ; as the source of attainments of that 
high and manly nobility, which receives nothing 
without an adequate recompense ; aye, of that 
higher and more glorious walk, to which the 
spirit of man sometimes ascends, when he is 



222 CONCLUSION. 

able to realize how much better it is to give than 
to receive ; that earth or heaven has no brighter 
crown or reward for noble endeavor than the 
consciousness of deeds done without expectation 
or hope of reward — of goodness and virtue and 
benevolence for goodness and virtue's sake. 

Out of the record of woe and sorrow, out of 
the rivers of blood and tears, out of the waiting 
and sighing and agony, the dead past calls to the 
present ; calls to all men who reverence and love 
justice; to teachers and thinkers who respect 
truth ; to any and all who can bear a message ; 
by the respect for the wellfare of all you most 
love ; by your hope for the present ; by your 
wish for the future ; by the mute appeal of the 
white lips of the starving ; by the voice of pity ; 
by the voice of love, write these truths high 
upon the scroll of the present; burn them into 
the consciences and minds of all men, that their 
light may illumine the pathway of nations and 
scatter garlands of blessings to the end of the 
ages. 



APPENDIX. 223 



APPENDIX. 



Delusions. 



In this work I have attempted, by reasoning 
from cause to effect, to build up an argument 
which would carry the reader, by a necessary 
sequence of acknowledged principles, to absolute, 
irrefutable conclusions. I have done this, so as 
to cover just as little ground and just as few facts 
as possible, and yet make the ideas plain which 
I wish to convey. In doing this I have left out 
many statements used in common parlance, 
which may seem to need explanation. All ordi- 
nary conclusions of previous writers must neces- 
sarily differ and be erroneous, for the reason I 
have so often pointed out, and lest some one 
might be misled by ideas which are constantly 
met, and which I have not succinctly explained, 
I shall touch upon the most common of these 
briefly in one chapter. This will enable the 



224 * APPENDIX. 

reader, who is unaccustomed to the pursuit of 
this science, to steer clear of the most common 
errors which abound in almost every page of the 
very best writers. They use interchangeable 
wealth and money, money and gold, confound 
profit, rent and interest in as many different 
periods of the same page. They go into an argu- 
ment, plausible enough, until you observe, they 
started with interest, talk of it as profit in the 
middle, and possibly end up with rent, 
ist. u Gold is the standard of value." 
Error. Nothing is a standard of value. Gold 
gets its value like beef or lead — fluctuates from 
same causes, though less than they. All politi- 
cal economists say so without a dissenting voice. 
2nd. "Gold is a measure of value " 
Wrongagain. Nothing is a measure of value, 
except, possibly, brains. If gold, or money even, 
was a measure of value, a child could measure 
the value of any object with a dollar as well as 
a man. The trouble with this assumption is, that 
it requires education to enable the person to 
measure the dollar. No two individuals measure 
the dollar alike. To one it is a day's work, an- 
other one-third or one-tenth of the same; to one 
it represents wheat, to another cloth, to a child 
one thing, to a youth another, to a man some- 



APPENDIX. 225 

thing different. The average of these educated 
ideas of the relation of all values ("the money 
of account"), the idea which is represented by 
the gold or silver thing we call a dollar, is the 
nearest a standard of value of anything on earth. 
This idea is the standard with which we compute 
all values, even that of the gold in the dollar. 

3rd. u Money value is measured by the value 
of bullion in it." 

Wrong again. This was so the first day gold 
was legalized as money and coined as such; but 
ever afterwards the value of gold was modified 
and controlled by its being coined into money. 
The proper scientific expression is " measure of 
payment." 

4th. " Money of the world." 

Is no such thing. The moment money goes out 
of a country where made, it ceases to be money 
unless some legal regulation there makes it 
money or declares its legal status. It is money 
then, because of such law, and not because it is 
made of any particular thing. 

5th. "To make paper as valuable as gold it 
must be redeemable in gold or silver." 

No political economist of any note says this. 
Mr. Mill, even, does not pretend but paper can 
be at par with gold by limitation. The silver 



226 APPENDIX. 

certificate is not redeemable in gold, nor any- 
thing which is redeemable or exchangeable for 
gold. It is redeemed in a dollar. This dollar 
is worth a gold dollar, though it contains but 80 
cents worth of silver ; the balance of its value 
is a creation of law. The 80 cents worth of sil- 
ver is composed of 33^3 per cent, profit and 
interest, and 66^ per cent, labor, so in reality, a 
silver certificate is redeemable in 53.34 per cent, 
worth of labor and 26 66 profit and interest, and 
20 per cent, of fiat of law. 

6th. " If one wants to go to Europe, how can 
they go there without gold or silver money? " 

Nine cases out of ten this question will be 
asked of any one who advocates paper money 
in any assembly. The man who asks it is 
usually one who never went out of his own 
township unless he walked. But he is always 
troubled about how to take that trip to Europe, 
if we should happen to make an equitable sup- 
ply of paper money. The answer, of course, is 
to go to a bill broker, buy a bill of exchange, go 
right over and have a good time. Never on any 
account take any gold or silver money along. 
It will not be money there, and you will have to 
pay quite a discount on it. Besides, if you 
should happen to be drowned some valuable 



APPENDIX. 227 

material would be lost, and if you should 
happen to go down with a bill of exchange, noth- 
ing of any material value would be gone. 
7th. " Money is a natural product." 
Just as much a natural product and, regulated 
by the law of competition as a legislature, a 
light-house, a man-of-war or a court of justice. 

8th. " Interest is the natural result of compe- 
tition, and goes up and down with labor ; is the 
result of average profit," as says Mr. George. 

In India it is 20 to 50 per cent., in China 15 to 
30 per cent. Wages ought to be very high 
there. That is utterly against all fact. Interest 
on money is the result of competition for the use 
of what there is. What there is, is not governed 
by competition, but by chance, greed, and the 
want of knowledge of the law of money. 

9th. " Gold is real money." 

That depends upon whether it is or not. It 
is, when it is so made by law. Greenbacks 
made legal tender would be money, or anything 
else which is a legal tender for debt, and carries 
the amount of value established by law as the 
unit or standard of payment. And if it has not 
this legal power it is not money, though every 
piece weighs a pound, is pure gold, and studded 



228 APPENDIX. 

with diamonds as valuable as those in the coronet 
of Victoria. 

The farmer and laborer says : 
"I never borrow money; I care not whether 
interest is high or low, it does not affect me." 

They never eat a loaf of bread but interest is 
stamped upon its price, and their labor scaled 
down thereby, nor does the farmer sell beef or a 
tub of butter, but the price is scaled down by 
interest, and if, perchance they can pinch and 
save a little from their earnings, they betake 
themselves to some banker, where they get three 
per cent, interest, never thinking that in the 
victuals they eat and clothing they wear, they 
consume interest enough each year to pay three 
per cent, upon the earnings of a life time. 

nth. "Inflation." 

Never was any such thing. It is the popular 
bugbear to scare men into paying high prices 
for credit. No money made to carry the value 
of the standard of payment ever did or can 
depreciate until you have an amount far beyond 
that which I advocate. No man would ever 
part with such money for less than par, as long 
as its interest would equal the average increase 
of wealth. 



APPENDIX. 229 

1 2th. " Protective tariff protects labor." 
Well ! Yes and no. The object of protection 
is to prevent competition in price of foreign 
goods; that is, to enable home manufacturers to 
charge an advanced price for products. Now, 
price is composed of rent, wages, profit and in- 
terest. Protection, therefore, is to allow more 
rent, profit, wages or interest to be charged in 
price of home products — to protect high rent, 
profit, interest and wages. Hence, if the rise in 
price is caused by adding more profit and in- 
terest than wages, it would result in a relative 
decrease of wages. If the relative amount of in- 
crease in price was the same from adding profit 
and interest, and pay of labor, wages would be 
just the same. So in the sense of increase of 
wages protective tariff may or may not protect 
labor. But whether it does or does not increase 
wages, any people who wish to indulge in the 
luxury of high interest and consequent high 
profit, must of a necessity protect them against 
foreign competition. It is a matter of life and 
death. As I have shown voluntarily stored capi- 
tal must make interest on money, or it will be 
turned into money. The moment such capital 
(stored for profit) comes in competition with 
capital stored by money drawing lower interest, 



23O APPENDIX. 

it will cease to compete. 1st. Because it can't 
make the interest. 2nd. It has an alternative — 
it can do better. The owner of such capital will 
gather together his circulating capital and turn 
it into credit (loaned money), sell his mills for 
junk or let them rot down. His employees 
thrown out of employment must stand idle and 
starve, or compete with other laborers for a 
chance to produce raw products or borrow this 
money, store capital, open up land and produce 
raw products. This puts interest up and raw 
products down. The foreigner buys their cheap 
raw products, composed mostly of labor, and 
having manufactured them sends them back 
burdened with profit and interest, and this dupli- 
cated and reduplicated, a large proportion of 
which costs nothing (price of credit), and this 
nothing, which I have called wind, is a surplus 
and must be paid for by some desirable product 
of labor. Wages in products exchanged would 
equal each other, and this surplus of profit and 
interest would constitute a balance against the 
home market. Gold and silver must go abroad 
to meet this balance of trade; this is a mathe- 
matical certainty — must and always does occur 
under such circumstances. 

This contracts money, raises interest, contracts 



APPENDIX. 231 

production, throws labor out of employment and 
forces wages lower and lower. Any civilized or 
half-civilized nation by such a process will be 
ultimately driven to the lowest state of degrada- 
tion and misery. Witness India to-day. Capi- 
tal cannot be coerced to work for low profit so 
long as it can be turned into credit at high in- 
terest. Men only store capital below interest 
from the pressure of necessity. Under this view 
a protective tariff is a necessary evil — necessary 
to all new countries until money is accumulated 
so as to compete in interest and profit with older 
nations, or until wisdom, by some divine gift, 
rests upon the law makers of such people. High 
interest and consequent high profit are the spikes 
by which the hands and feet of labor are nailed 
to the cross of poverty. Protective tariff is an 
umbrella suspended over it, in the hope that its 
shade may prolong and perpetuate its travail. 

A country like the United States, with a credit 
equal to England or France, could issue and 
circulate- her credit as cheap as they, and by 
making interest in accord with justice, openly 
compete with any and all nations. The million- 
aire would become extinct, the laborer raised to 
the position of independence and manhood, and 
justice rule and reign. 



232 APPENDIX. 



Tables Compiled from the Tenth Census m of 
the United States. 



The following tables are an epitome of facts 
drawn from the tenth census of the United States 
of America. This census was taken during the 
last days of an administration of the government, 
which had controlled the affairs of the nation 
for twenty years, and was evidently designed to 
exhibit the condition of the country in the best 
possible light to advance its claims to a con- 
tinuance of power. It was placed in charge of 
the Hon. Francis A. Walker, a man eminently 
qualified to give a thorough examination, and to 
marshal the results to the best advantage. Am- 
ple means were furnished to put special agents 
in the field, in departments where no such agents 
had been placed before: notably the fisheries, 
which had no place in previous returns. 

Every effort being thus made to make this 
census exhaustive in detail, where any omissions 
were found, estimates were added, which esti- 



APPENDIX. 233 

mates, being made by persons interested in giv- 
ing a full production, may be taken as sufficient 
to meet all requirements of truth. I, therefore, 
conclude, that legitimate deductions, from these 
returns, and additional estimates, will bear me 
out, in being the outside of the quantity of pro- 
duction and cost of distribution of that year. 
The main facts were gathered from the census. 
All estimates are made by comparison, and study 
of these facts — unless otherwise stated. 



234 



APPENDIX. 

TABLE I. 



Raw products produced in the United States in the year 
1 1879 and 1880) according to the census of 1 880, with 
all additions bv estimate : 



AGRICULTURAL 
PRODUCTS. 



MEASURE. 



QUANTITY. 



Corn 

Wheat 

Oats 

Rye 

Barley 

Buckwheat . . . . 

Rice 

Irish potatoes . . . 
Sweet potatoes . . 

Hay 

Cotton 

Tobacco 

Peas and beans . . 
Market gardening . 
Orchard products . 

Hops 

Hemp 

Flax 

Flaxseed 

Cane sugar . . . . 
Maple sugar . . . . 
Cane molasses . . . 
Sorghum syrup . . 
Maple syrup . . . . 

Beeswax 

Honey 

Grass seed 

Cloverseed . . . . 

Wool 

Butter 

Cheese 

Milk 

Poultry products. . 

*Wines 

*Wool product . . 

*Meat 

*Butter 

*Cheese 

*Milk 

^Poultry 



Bushels , 



Pounds . 
Bushels . 



Tons . 
Pounds 



Bushels , 



Pounds . 
Tons . . 
Pounds . 
Bushels . 
Hhds . . 
Pounds 
Gallons , 



Pounds . 
Bushels . 
Pounds . 

Gallons . 



Gallons , 
Pounds , 



Pounds . 
Gallons , 



1,754: 
459: 

40- 
19 
43 

110 
I69 

33 

35: 

2,771 
472 

9: 



591,676 
•183,137 
858,999 
.831,595 
.997,495 
.817,327 
131,337 
458,539 
.378,693 

150,711 

.797,156 
,661,157 
,590,027 



26,546,378 

5,025 

1,565,546 

7,170,951 

178,172 
36,576,061 
16,573,273 

28,444,202 
1,796,048 
1,105,689 

25,743,208 
1,317,701 

1,922,982 

155,681.751 

777,250,287 

27,272,489 

530,129,755 



20,000,000 
85,000,000 



122,749,713 
272,727,511 

1,269,870,245 



39.6 

95-i 

36. 

75-6 

66.6 

59-4 
.06 
.483 
•45 

11.65 
.098 
.082 
.150 



.24 
200.00 

•25 

1.25 

90.00 

.13 

•35 

•33 

1. 00 

•33 
.22 
1.50 
6.00 
.28 
.21 
.095 
•075 



.60 
.28 



.21 

.095 

•075 



$694,818,304 

436,968,463 

146,829,240 

14,992,686 

29,302,332 

7,019,492 

6,607,882 

81,848,474 

15,020,412 

409,505,783 

271,636,121 

38,758,215 

14,385,041 

21,761,250 

50,876,154 

6,37i,i3i 
1,005,000 

391,387 

8,963,689 

16,098,480 

4,754,888 

5,800,646 

9,386,587 

1,796,048 

364,877 

5,663,506 

1,976,552 

11,537,892 

43,590,890 

163,222,560 

2,590,886 

39,759,731 

76,429,309 

12,000,000 

a 23,800,000 

£•800,000,000 

b 25,777,440 

b 25,909,114 

95,240,269 

103,570,691 



Total agricultural products . . $3,726,331,422 

^Estimated by the Hon. J. R. Dodge, Commissioner of Agriculture. 



APPENDIX. 

NON-PRECIOUS METALS. 



235 



Anthracite coal . . . 

Bituminus coal . . . 

" irr. mines. 

Iron ore 

Copper, lead, zinc 
and others 




28,698,812 

41,860,055 

916,569 

7,974,706 



$ 42,196,678 

52,427,869 

1,092,305 

23,156,957 
25,021,024 



Total non-precious metals 

Total precious metals, gold and silver 



. $143,894,832 
. $74,490,620 



FORESTRY. 



Wood, domestic use . 








$306,950,040 
139,832,869 
43,290,185 

100,000,000 


Saw logs 








Sundries 








Estimated by Com- 
missioner of For- 
restry 









Total of forestry $590,073,094 



Petroleum . . . 
Quarries, total . 
Fisheries, total 



Barrels 



24,235,081 



.90 



20,411,572 
18,356.058 
43,046,053 



Grand total all raw products $4,616,603,651 

"a." 34,000,000 pounds wool from ranches, not from farms, 28 cents, 

$9,520,000. 

"3." This cheese and butter contain a part of milk sold to butter 
and cheese factories (530,129,755 gallons), to wit: 312,702,666 at 07.5 per 
gallon=$23,4i5,574, a clean duplicate. 

%t c." A part of this meat is produced on ranches and part in towns 
and villages, estimated to 2.6 per cent, of the total product of corn, 
which amount is sold outside for this purpose. 



236 



APPENDIX. 



TABLE II. 

DISPOSITION OF RAW PRODUCTS, RETURNED BY THE IOTH 
CENSUS OF THE UNITED STATES OF AMERICA, AND 
ESTIMATED OMISSIONS, YEAR 1879-80; WITH A VIEW 
OF SHOWING FARMING, MANUFACTURING AND MIN- 
ING PROFITS AND PER CENT OF PROFITS. 



Raw Products. 



Corn 

Wheat 

Oats 

Rye 

Barley 

Buckwheat .... 

Rice 

Irish Potatoes . . . 
Sweet Potatoes . . 

Hay 

Cotton 

Peas and Beans . . 
Market Garden . . 
Orchard Products . 

Hops 

Hemp 

Flax 

Flax Seed 

Cane Sugar . . . . 
Maple Sugar . . . 

Tobacco 

Cane Molasses . . 

Sorghum , 

Maple Syrup . . . . 

Beeswax 

Honey 

Grass Seed 

Clover Seed . . . 

Wines 

Wool 

Meat c 

Butter 

Cheese 

Milk 

Poultry 

Total of. . . . 



Consumed on the Farm. 



Bushels. 



Pounds. 
Bushels. 

Tons. 
Pounds. 
Bushels. 



Pounds. 
Tons. 
Pounds. 
Bushels. 
Hogsh'ds 
Pounds. 

Gallons. 



Pounds. 
Bushels. 



Gallons. 
Pounds. 



Pounds. 
Gallons. 



Price. 



•39-6 

•95-1 

.36 

•75-6 

.66.6 

•594 
.06 
.48.3 
•45 
11.65 
.09.8 
1.50 



.24 

200.00 

•25 

1.25 

.90 

•13 
.08.2 



.35 

•33 

1. 00 

•33 
.22 
1.50 
6.00 
.60 
.28 



.21 

.09.5 

.07-5 



Amount of 
Seed. 



15,592,123 

62,003,082 

40,361,486 

2,763.349 

3,995,454 

848,389 

10,450,380 

15,062,976 



717,095 



1,185,931 
1,480,878 



Seed. 



APPENDIX. 



237 



TABLE II. — CONTINUKD. 



Consumed on the Farm. 



Dollars. 


Work 
Animals. 
Amount. 


Dollars. 


Meat and 

Milk 
Product. 


Dollars. 


6,174,698 

58,964,931 

14,530,133 

2,089,092 

2,660,972 

503,943 
627,022 

7,275,417 


491,285,669 
203,929,499 


194,549,125 
73,414,620 


756,428,214 


299,545,355 












































13,164,137 


153,362,196 


12,443,120 


144,962,348 










































896,368 






















































































1,778,897 
8,885,268 






























































































104,386,741 


Fed work 
animals. 


421,325,941 


Hogs 
and Cattle. 


144,962,348 
299,545,355 



238 APPENDIX. 

TABLE II.— CONTINUED. 



Consumed on the Farm 


Transported from 


Farm, 


Human 

Food 

Amount. 


Dollars. 


Fed Meat 

Producing 

Animals. 


Dollars. 


Consumpt'n 

Raw. 

Amount. 


140,367,334 


55,585,464 


a 45,619,383 


18,065,275 












81,400,826 








































89,230,613 

74,697,784 

16,689,346 

9,543,454 


77,197,781 
16,689,346 


37,286,528 
7,510,206 












4,795,oH 


7,192,521 






4,795,013 




23,024,534 
















































18,288,031 


2,377,444 






18,288,031 


18,962,802 
898,324 

10,297,282 


6,257,724 
898,324 






9,481,401 
898,320 

15,445,923 
131,770 

18,000,000 


2,265,402 












2,000,000 

344,305,336 

68,978,431 

720,000,000 




1,200,000 






I 182,868,364 
72,304,120 






516,458,004 

103,467,656 
767,792,335 


6,552,952 
54,000,000 
72,000,000 

















TABLE II - 


CONTINUED. 


APPENDIX 




239 


Forests, Lakes and 


Mines. 


Manufactured. 


Dollars. 


Export 
Raw. 

Amount. 


Dollars. 


Amount. 


Dollars. 


29,304,297 


98,169,877 

153,252,795 
766,366 

2,912,754 
1,128,923 




347,496,409 
304,775,737 
81,400,826 
14,155,492 
39,873,118 
10,968,938 
10,450,380 
2,500,000 


137,608,577 

289,841,735 

29,304,297 

10,701,552 

25,889,498 

6,515,549 


5,353,837 

36,075,028 

7,510,206 

111,181,239 

7,192,520 






627,022 
1,207,500 


















1,628,372,833 


i59,58o,537 


1,143,424,323 


112,055,583 








1,742,639 

12,051,297 

5,061,173 

1,005,000 


13,370,780 


5,458,159 


2,403,543 
1,309,958 


21,088,219 

5,025 

1,565,546 

6,453,956 

178,812 








391,387 








8,067,332 








16,098,480 


2,377,444 








215,910,187 


17,704,735 


207,149,764 
16,573,273 


16,986,280 
5,800,646 


3,128,862 
898,320 


















1,105,689 


364,877 


197,655 








442,104 








2,652,624 














191,551 
39,236,658 


53,634 
15,882,120 
8,239,698 






274,302,546 
108,456,180 


240,490,200 


67,337,256 
326,946,960 


9,829,420 
57,584,426 


127,553,907 


12,117,621 






b 312,207,665 


























1,099,020,214 





240 

TABLE II.— CONTINUED. 



APPENDIX 





Forest and Mines. 


Manufactured. 




Amount. 


Dollars. 


Amount. 


Dollars. 


NON-PRECIOUS MET'LS 

Anthricite Coal . . . 




25,816,377 
26,422,150 

655,383 


1,362,901 
695,181 


i5,oi7,397 
25,310,530 


Bituminous 




Irregular Mines . . . 


436,922 


Iron Ore 




23,156,957 
25,021,024 


Copper, lead, zinc etc. 
















Total, 


88,505,908 

27,245,310 

283,123,054 
19,219,343 


PRECIOUS METALS 

Gold and Silver . . . 








FOREST PRODUCT. 

Wood, Logs, etc. . . d 
Petroleum 


95,774,735 


211,175,305 


1,192,220 


Fisheries, 




43,046,053 


Quarries 




18,356,058 










Total products, raw . 


1,535,469,890 

386,632,648 

104,086,439 

40,096,247 

1,134.655 


Imports, manufactured 








Add ^R.R.ft. charg's 
11 ~% freight on water. 














" X canal freights . 
















Total Imports & Ft's. 








531,899.989 


Total of all Products, 
entering into manu- 
facture, freight ad'd. 








$ 2,067,369,879 











a. Transported off of the farm and fed to produce meat in the 
towns. 

b. Part of milk reported in farm products and charged to agricul- 
ture as milk. 

c. Part made on ranches and off of the farm in towns and villages. 

d. One hundred million added by estimate of commissioner for 
omissions. 

e. Hon. J. R. Dodge, commissioner of agriculture, adds by estimate 
1,086,297 514 to these items to make the grand total of agricultural pro- 
duction 3,726,331,422. Transportation charged in proportion to total 
products transported. 

All estimates made on returns in census, except, perhaps, 10 per 
cent., and such, when there is a doubt, are taken against the claims 
sought to be established ; and when it is seen that a mistake of ten 
millions makes but one-one thousandth of 1 per cent, in my calcula- 
tions, it will not be questioned that they are accurate beyond any 
necessity. 



APPENDIX. 241 

TABLE III. 

SHOWING CONDITION OF THE FARMER: 

Charge farm with agricultural products $3,726,331,422 

" " " wood consumed and sold 95774,735 

Total $3,822,106,157 

CREDIT FARM WITH 

2.6. of corn fed to meat producing animals 

off of farm $ 18,065,275 

Corn fed to work animals on farm (see table ii.) 194,549,172 
Oats " " " " 73,414,620 

Hay " " " " " " 153,362,196 

Hay " M milch cows '* " 144,962,348 

Wool charged to agricultural products grown 

on ranch (see table ii ) 9.520,000 

Milk sold to manufacturers (charged twice, 

see table ii.) 23,415,574 

Seed (see table ii.) . . . 104,386,741 721,675,879 

Total sold off farm, chargeable to farmer. $3,100,430,278 

CREDIT CONTINUED. 

Wages of 620,729 boys, $6.00 per month (boird) $44,692,488 
" 458,648 women, £13 per month (4 

board and 2 per wet k) 71,549,088 

Wages of 2,583,116 men, #21 per month (12 

board and 9) . . . 649,945,708 

By expense, fences 77,763,473 

" " manures 28,586,397 

By taxes 71.6 per cent, of assessment .... 223,929,516 

Replacement stcck, 10 per cent 190,698,466 

2 per cent, profits on assessed valuation . . . 242,081,628 1,529,246,178 

Divisible as wages to 4,008 907 farmers . . $1,571,184,100 

Which equals for 300 days $391.92 or $1.30^ per day. 

This table is made on the basis of the census of 1880. I charge the 
farmer with all agricultural products as returned in the census and 
also with $1,086,297,514, which Hon. J. R. Dodge estimates was omitted 
by the census; also $95,774,735 wood consumed by farmers. I credit 
him with wool grown on ranches and butter and cheese twice charged 
as milk sold to cheese factories and afterwards estimated as butter; 
2.6 per cent, of corn is estimated to have been fed off the farm to meat 
products charged him, and hence is a duplicate. I deduct this. I de- 
duct wages paid to boys $6.00 per month, women $^3.00 and men 
$21.00 ($12 and board). These cover all wages, except those of the 
farmer himself, for threshing, cutting, seeding and hauling grain to 
market. I allow him $32.00 to feed a work horse one year, or 2.4 cents 



242 APPENDIX. 

worth of corn and 3.3 cents worth of hay per day at the schedule 
price. For replacement of a horse I allow $5.40 each year, and for use 
he gets $1.08 and nothing for shoeing. 

I allow nothing for salt, repairs of barn or house, insurance, or in- 
terest on the mortgage. He must take care of all of these out of his 
profit of $60 38 on his $391.92 of wages, as well as feed, clothe and edu- 
cate a family of five. 

Each farm averages in whole numbers 134 acres at $19 per acre or 
|2,544, and at 2 per cent, brings the farm $50.88, two-thirds of which 
may be termed rent. He gets at same rate 2 per cent, on $475 of capi- 
tal in his stock and machinery, or $9.50 each year. 



APPENDIX. 243 

TABLE IV. 

SHOWING CONDITION OF THE MANUFACTURER. 

Total sales of all manufacturers $5,369,579,191 

Total raw products used $2,067,369,879 

Duplications and repurchases 1,329, 453,670 

Total materials show by census . . . $3,396,823,549 
Wages paid 947,943,795 4,344,777,344 

Total to profit, interest and incidentals $1,025,801,847 

I estimate these incidentals to be: 

Taxes, 14.12 per cent, of all taxes 44,204.222 

y± of all insurance 14,661,046 

% of all postage 12,180,936 

}| of all telegraph cost 5,565,577 

% of all telephone cost 1,098,081 

Jeofail paper manufactured 18,336,637 

1-6 of all publishing 10,089,083 

10 per cent, replacement, working capital, 

% total capital 139,513,630 245,649,219 

Balance for profit, loss and interest . . $780,152,628 

Total wages paid 1947,953,795 

Of this 181,921 children get 45 cents per day or $24,559,335; 531,639 
women get 75 cents per day, $119,618,775, and the balance is divided 
between 2,019,035 males, who get $396 86 per year or $1.32^ per day. 
The census shows that materials were purchased and used in manu- 
facturing to the amount of $3,396,823,549, and that it sold for $5,369,- 
579,191. The most casual observation shows that a large amount of 
these purchases were repurchases of the same material in different 
stages and processes of manufacture. 

Iron appears as ore, as steel, as springs, as wire, as watch springs. 
From table ii. I get the total (and I think I estimate it high), which 
goes raw to manufactories, as $2,069,369,879, and this is bought and 
portions re bought, until with profits and wages added, it sells for 
$5,369,579,191. Computed over and over again it adds to the price the 
compounded profits, but not necessarily in the same ratio to manu- 
facturers' profits. 

I have credited the manufacturer with the most liberal estimate of 
all incidentals which enter into expenses, and class the balance as 
profit, loss and interest, or added expense to cost. For profit in 
manufactured goods see table v. 



244 



APPENDIX. 






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APPENDIX. 
Tx\BLE VIII. 



249 



Showing production of the United States for 1880, as 
census estimates : 



Total raw products . . 
Amount manufactured 



Balance consumed raw or exported . . . 
One-half R. R. freight charges delivering this 
Total value of manufactured goods (duplica- 
tion omitted) 

Paid middle men for rehandling and distri- 
bution, 20 per cent 



Total gross production (everything added 

Total working capital reported 11,451,225,619, 
one-half of which is stored by money and 
pays int. at about an average of 7 per cent. 

Ten per cent, replacement on balance (waste) 

Fed to work -animals and cows 

National taxes 

State, county and municipal taxes 

Postage 

Insurance 

After taking out all necessary incidentals, 

but no profit or duplicate interest . . . 

Wages of boys engaged in manufacturing . . 

Wages of women engaged in manufacturing 

Wages of boys engaged in farming 

Wages of women engaged in farming . . . . 
All other boys, women and old men not in 

personal or professional service 

In professional service, boys at board #6 per 

month 

In professional service, women at board at 

#13 per month 



Total balance to be divided . 



4,616,603,651 
2,067,369,879 



400,892,896 
572,561,280 
669,675,026 
333»526,6io 
312,750,721 
36,542,804 
90,699,234 



24,559,335 
119,618,775 
44,692,488 
71,047,800 

71,047,800 

29,670,264 

189,569,487 



2,549,233,772 
290.538,682 

4,598,525,49 
948,818,966 



8,387,116,910 



5,970,568,339 



550,707,234 



5,419,861,105 



Total professionals and other laborers, 12,986,111. which gives to 
each $417.28 per year, or $1.39 per day. 

Thus, if all the production of 1880 was equally divided between pro- 
fessional and wage working laborers, they could only each get #417.28 
per year of 300 days, or #1.39 per day. 

If we divide this total production between wage workers alone and 
allow that thev support the professionals, it would be divided by 
IO »539» I 49 and give per year of 300 days to each #523.76, or per day 



25O APPENDIX. 

It is not in reality so divided. By examining table iii. it will be seen 
that farmers get $391.92 or $25.36 less than this; farm laborers get $240, 
or $177.28 less than this; mechanics get (table iv.) $20.24 less than this; 
miners get $76.26 less than this. 

By multiplying these amounts by the amounts of laborers in each 
branch respectively, it will be found that it amounts to $613,008,186, 
which sum is pinched out of all labor by high interest and profits to 
pay the same. The balance of profit and interest is collected, as I 
have shown, by adding to goods (an average of 20 per cent, upon all 
manufactured goods) and equals $979,705,198, about one-half of which 
comes out of farmers and the balance out of the remainder of society. 

It is thus not hard to see where the millionaires come from. 

The 20 per cent, profit and interest on manufactured goods takes 
enough out of the farmer to absorb all the profit of his land and capital 
(rent and profit) and make 240 millionaires besides. 

The interest and profit out of the balance to make 480 millionaires, 
or 960 half millionaires. The railroads alone absorb to pay interest, 
nearly twice as much as their capital averages to make, all of which 
goes in the same way. 



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